Premier Foods to keep Hovis, eyes overseas partners

Tue Oct 1, 2013 3:05pm EDT
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By Neil Maidment

LONDON (Reuters) - Britain's Premier Foods (PFD.L: Quote) is focused on expanding Hovis bread, one of its biggest brands, and has no plan to sell the business for now, the company's chief executive said on Tuesday.

The maker of Mr. Kipling cakes and Bisto gravy has spent years dealing with management changes, refinancing and asset disposals to help cut debt built up before the financial crisis, but its prospects have begun to improve and is now also looking for overseas growth.

Shares in Premier Foods have almost doubled in six months to 152 pence due partly to an improved trading performance led by a greater focus on best selling brands such as Ambrosia and Bisto.

Media reports have suggested the share price rise could also have been helped by speculation that Mexican bakery firm Grupo Bimbo is eyeing Hovis.

Premier's CEO distanced himself from a sale of the brand so soon after a shake-up of the bread business.

"We've done the hard yards on Hovis, we've taken the pain of the restructuring, taking 1,000 jobs out of the business, taking significant restructuring costs," Gavin Darby, who joined the firm in January, told Reuters.

"I tend to come from a background of trying to grow things, so we are working hard on a growth strategy for Hovis."

Cost savings, new products and increased marketing of its best-selling brands helped lift trading profit by 50 percent in its first half and the firm is forecast to reduce year-end net debt to between 840 and 860 million pounds.   Continued...