Strong trading for Premier as it gears up for RHM takeover

By Catherine Boal

- Last updated on GMT

Related tags Premier foods Premier

UK food processor Premier Foods remains undaunted by last year's
rising raw material costs and unseasonably warm summer weather -
posting a 12 per cent rise in pre-tax profits in its preliminary
results announced yesterday.

Premier, who own grocery brands Branston pickle and Gale's honey, attributed its 21.5 per cent jump in turnover from £789.7 million (€1.16 billion) to £959.4 million (€1.41 billion) to recent acqusitions and continued brand growth.

The processor acquired the Campbell food company in a £468.9 million (€689.3m) deal which will add iconic British brands Oxo and Batchelors to the Premier portfolio.

And the company expects to complete its takeover of leading UK baker RHM by the end of next week.

The £1.2 billion (€1.76m) RHM acquisition will give Premier control of the UK's second largest bread brand Hovis and its cake and biscuit brand Mr Kipling and turn the company into the UK's largest food processor.

In May last year, Premier discontinued its agreement with confectionery group Cadbury to manufacture, market and sell Cadbury branded hot cocoa beverages.

The licence has since been replaced by an arrangement to supply the products directly to Cadbury who now market and sell them independently.

But termination of the lucrative cocoa contract, coupled with commodity-related costs failed to dampen Premier's focus on growth in its brand portfolio and market presence.

Premier chief executive Robert Schofield said: "Above all, these acquisitions have been achieved whilst we have continued to grow our existing business, which has more than compensated for the impact of the end of the Cadbury chocolate beverages licence, significant raw material and energy price inflation and the extended warm weather through the summer and autumn."

Marketing spend on Premier brands was £31.8 million (€46.7m) during the year which saw dessert brands Hartley's grow by 10 per cent and Ambrosia 8 per cent.

The company remains optimistic that the group's profits will continue to improve and stated: "We are confident that we will continue to develop the business in line with our strategy, focusing on driving our branded sales growth while remaining tight control of our cost base."

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