Premier Foods plc today (4 August) posted widening half-year net losses due to higher mark-to-market losses on swap contracts but the UK’s largest food producer said it remained on track to generate GBP100m (US$152m) cash flow for the year.
Net losses for the producer of Hovis, Mr Kipling and Quorn grew by GBP17m to GBP40m for the six months to 30 June
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Profit before tax fell 15.4% to GBP33m in the same half of 2009.
Sales fell 5.2% to GBP1.18bn in the same period of the previous year.
The group saw a 3.2% increase in sales of its “drive” brands, which includes Hovis, Mr Kipling, Quorn, Ambrosia, Sharwoods, Hartley’s and Loyd Grossman, up to GBP417m in the half. Sales of these brands were up 5.2% by volume. Within this, Hovis volumes were up 5.1% and other brands were up 5.2%.
Premier’s core brands, which include Batchelors, Bisto, Branson, Cadbury Cakes and Oxo posted a 1.7% sales increase, and a 4% increase by volume.
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By GlobalDataThe company said Hovis and Mr Kipling both took volume share in declining markets, helped by the new products launched in 2009.
The company saw non-branded sales fall 12.7% to GBP61m. It attributed the drop to a 9.6% fall in sales volumes due to market decline. Some GBP42m of the decline was in its bread division due to a drop in the own-label bread market, wheat price deflation and contracts which were not renewed to free up capacity for Premier’s bread brands.
Chief executive Robert Schofield said: “Our principal brands are growing in both volume and market share and our gross margins have risen as we have improved product mix and delivered procurement gains and manufacturing efficiencies. We are controlling costs tightly and have made good progress in strengthening our cash flow and reducing debt.”
Click here for the results statement from Premier; click here for coverage of the company’s conference with analysts.
