FDBusiness.com

Premier Foods is to reorganise its Milling business into two distinct parts to strengthen focus on its free trade (third party) customer base while vertically integrating its remaining milling operations into its baking and grocery businesses. In addition, it is proposed to close the company’s mill located in Barry, Vale of Glamorgan, by the end of October 2013 to align capacity with current market demands.

In future, a dedicated management structure will be established to oversee Premier’s Rank Hovis free trade business. This will be largely serviced by the company’s sites in Southampton, Manchester and Newbridge. The remaining mills in Wellingborough, Selby, Andover and Gainsborough will be organised into a vertically integrated flour supply business for the company’s baking and grocery business.

Premier will invest an additional £1 million in improving the capability of its Southampton and Wellingborough sites as part of this re-organisation although the overall group guidance on capital expenditure remains unchanged.

Following a review of current milling capacity and demand, it is also proposed to close the company’s mill located in Barry. This will be phased over the coming months with final closure expected by the end of October 2013, resulting in the loss of around 43 employees plus a smaller number of local contractors.

Bob Spooner, managing director of Premier Foods’ Bread Division and group supply chain director, comments: “The Rank Hovis business has over 100 years of history in British milling with significant scale, expertise and know-how. By creating a dedicated structure aligned to our Rank Hovis customers, we will be able to improve further our customer focus and service levels.”

He continues: “It’s also critical that we take the tough decisions necessary to improve the longer term profitability and sustainability of the milling business by aligning our capacity to market needs. We recognise the impact this proposal will have for our employees in Barry and we thank them for their contribution over the years. However, it’s not possible to continue on the current path given excess capacity in the marketplace.”

This proposed reorganisation is the latest step in Premier’s plans to re-build value in its Bread and Milling business begun in 2012. The expected costs associated with the restructuring of the business announced last year will remain unchanged at approximately £28 million. The costs associated with the proposed closure of the Barry mill will be absorbed into this.