Premier Foods, the UK’s largest food manufacturer, had some mixed news for investors this morning (18 November) with the announcement of a lending deal with its backers – but also the decision to scrap its interim dividend.
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The company, which has faced speculation over its high debts, said it had secured an agreement with its banks to defer the next covenant test from 31 December to 31 March next year.
Premier said discussions with its lenders on reducing its debts remain ongoing, which was a factor in its decision to scrap its interim dividend.
“In these circumstances, the board has determined not to pay the 2008 interim dividend and will consider the future dividend policy as part of the long term capital structure review but it is the board’s intention to resume dividend payments when debt levels permit,” Premier chairman David Kappler said.
The Mr Kipling-to-Branston pickle maker said sales were up 9% for the 17 weeks to 25 October. Sales for its fiscal year so far are up 8%.
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By GlobalDataTwo of Premier’s divisions – its grocery business and the unit that includes its chilled business and its Irish operations – enjoyed rising volumes over the period, the company said.
Grocery sales rose 9% during the four months to October and have climbed by 5% over the year to date. Sales from Premier’s Chilled & Ireland unit rose 7% during the period to October, taking the sales gain for the year to date to 4%.
Sales from Premier’s Hovis business rose 11% during the four months to October and were up 14% over the year to date.
“We have seen both good sales volume and value growth over the last two months in our Grocery division and that momentum has continued into November,” chief executive Robert Schofield said.
“Our broad portfolio of category leading brands and retailer branded products is demonstrating a natural resilience in the current economic conditions. Our relaunch of Hovis has been positively received by consumers and our Chilled & Ireland division is benefiting from improved volumes.”
