Hovis healthy range contribute to RHM profit

Shares in the group fell last year but last week, RHM reported a surge in annual profits.

Underlying operating profit rose from £158.2m (€228m) to £173.5m (€250m) for the year ending April 29 2006 with turnover up by 2.1 per cent.

And the previously disappointing cakes sector picked up to contribute to the company's success - going from a 14 per cent decline in the first half of the year to an 8 per cent decline in the second.

CEO Ian McMahon said: "We are increasing investment behind our brands. We have a wide range of new products under development across all business areas, with Hovis, Bisto, Sharwood's and Cadbury's Cake products all due to appear in store in the first half of the fiscal year."​

Last year, the company relaunched its Hovis range under the name 'healthiest ever' in order to target a health-conscious market.

The new Hovis products claim to be low in salt, high in whole wheat and free from artificial flavourings and preservatives, and in February this year the Hovis Granary range was re-introduced to the market - as a healthier product containing omega 3-rich linseeds and sunflower seeds high in vitamin E.

Building on this year's success, the company is set to launch a new range of Hovis products in the next half, these will include three healthy-eating Hovis loaves.

After October 2005's drop in sales of the Mr Kipling brand, a new, healthier 'Delightful' range was added which was marketed as being free from artificial flavours and colours.

After the news of RHM's profits broke recently, the company's shares rose by 8 per cent to 286p.

But the company was dealt a heavy blow this week when private equity firm, Doughty Hanson & Co, sold their 26.6 per cent stake in RHM - equating to 93 million common shares.

They sold the shares at a discount of 6.3 per cent meaning a final price of 266p for each.

Following the news, company share prices fell 6 per cent from 284.75p to 268p.