FDBusiness.com

Premier Foods, the UK’s largest domestic food processor, has increased operating profit by £40m to £67m for the six months to 30th June 2010 following the completion of exceptional integration expenditure in 2009. However, trading profit declined 6% to £110m reflecting £11m of additional pension, marketing and restructuring costs.

Although the group’s brands are trading well in tough conditions, its own label sales declined by 12.7%. Total sales were down 4.5% on a pro forma basis to £1.21b for the period with volumes falling 4% and price and mix contributing 0.5%. Branded sales in the half year were up 0.5% on a pro forma basis at £790m and now represent 65.2% of total sales, up from 62.0% on the first half of 2009.

Gross profit margin improved by 60bp reflecting product mix, procurement gains and manufacturing efficiencies. Operating expenses fell 1.6% despite higher pension, marketing and restructuring costs.

Robert Schofield, chief executive of Premier Foods.

Premier Foods has set a target to generate a net £100m of cash per annum to pay down debt and is on track. Net debt was £110m lower at £1.365b than in June 2009 and average debt on a 12 month rolling basis, the group’s preferred indicator, is £44m less than at December 2009.

“These results reflect the actions we are taking in line with our trading strategy. 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,” comments Robert Schofield, chief executive of Premier Foods. “With the foundations of the strategy in place and delivery on track, we are looking forward to the rest of the year with enthusiasm.”