Premier Foods says key brand sales to miss targets

18th Jun 2014 07:17

Mr Kipling Cakes-to-Ambrosia rice maker Premier Foods warned that sales of its key brands were set to fall short of expectations this year, but said cost cuts should still help it to report annual results in line with hopes.Premier said second quarter sales of its "power brands", which also include Sharwoods curry sauces, Oxo, Bisto and Batchelors, were likely to be negative and below the group's expectations due to subdued grocery markets.But it said its profit expectations for the year to December 31st 2014 remained the same due to cost management."As a result the company no longer expects power brand sales to grow by 2-3% for the year to December 31st 2014, as previously indicated," it said.Premier also said in a trading update that it had done a deal with Specialty Powders Holding on a stand-alone joint venture to process and pack powdered beverages and desserts at Premier Foods' Knighton factory in Staffordshire.It said the move would improve efficiency and cut costs at Knighton and enable it to move two production lines from there to Premier's Ashford site in Kent, further streamlining its grocery manufacturing operation.The deal includes the transfer of about £16m of private label and business-to-business sales of powdered drinks and desserts from Premier Foods to the joint venture.In addition, the Brown & Polson brand of home-baking ingredients will be licensed to the joint venture for five years, which also includes a call option for the joint venture to purchase Brown & Polson for £2.75m.Premier will keep all its other brands manufactured at Knighton and all 200 staff at Knighton should transfer to the joint venture, it said. It will cost Premier about £4m in restructuring expenses in 2014.It also said it had finished consolidating its third party-operated grocery logistics sites from three national distribution hubs to two in Lancashire and Northamptonshire.PW