Shorecap reviews Premier Foods after profit warning

23rd Oct 2014 13:52

Shore Capital is reviewing its advice to investors to buy Premier Foods shares after the Mr Kipling and Ambrosia rice group warned the City to expect profits at the lower end of hopes.Premier said shoppers' increasing preference for discount supermarkets over the established "Big Four" had hit third quarter sales of its flagship brands, which also include Batchelors, Oxo and Sharwoods curry sauces.Shore Capital said it expected to reduce its annual trading profit forecast to between £130m-£133m from £143m, which would result in pre-tax profit of about £80m."Maybe more important are the cash flow implications of today's update, and the impact on Premier's deleverage process both in 2014 and beyond," the broker's Darren Shirley said. "As such, we place our 'buy' recommendation under review."Shares in Premier fell 4.5p or 13.14% to 29.75p at 14:04 in London.