Premier Foods plc PFD Further Step to Build Value in Bread

  Premier Foods plc (PFD) - Further Step to Build Value in Bread

RNS Number : 5290R
Premier Foods plc
20 November 2012




20 November 2012

                      Premier Foods plc ("the Company")

                                      

         PREMIER FOODS ANNOUNCES FURTHER STEP TO BUILD VALUE IN BREAD



Premier Foods  today announces  a further  step to  build value  in its  Bread 
business and  drive  sustainable  profitable growth  through  simplifying  its 
manufacturing and distribution operations  to improve efficiency, quality  and 
service levels, so enhancing the performance of the Hovis brand.



Proposals have  been developed  to close  two bakery  sites in  Greenford  and 
Birmingham during the course of 2013, in addition to the previously  announced 
closure of  the Eastleigh  bakery, and  to consolidate  production from  these 
locations into the Company's remaining bread manufacturing sites. In addition,
it is  proposed  to  simplify  the  bread  distribution  network  by  removing 
approximately 130 distribution  routes, taking into  account the reduction  in 
volumes from the previously announced loss  of a low margin bread contract  by 
mid 2013^1. As a consequence, the  Company is proposing to close  distribution 
operations in  Greenford,  Birmingham, Mendlesham  and  Plymouth. It  is  also 
proposed  to  restructurethe  Company's  outsourcedlogisticsoperations   to 
optimise the new network.Together, these proposals are expected to result  in 
approximately 900 fewer jobs across the Company's Bread Division.



Commenting on  the  proposals,  Michael Clarke,  Chief  Executive  Officer  of 
Premier Foods said:



"Having generated  solid  growth  momentum  in our  Grocery  Division,  it  is 
critical that we act to assure the long-term future of the Bread Division.  By 
simplifying our  cost base,  we can  increase focus  on improving  efficiency, 
quality and service levels to help grow our core Hovis business. We  recognise 
the impact these actions  will have for our  employees at the sites  affected. 
Decisions will not be taken lightly but they are necessary if we are to  build 
a strong and  successful future for  the Bread Division  and those who  remain 
with our business".



Appropriate consultations with employees affected  by the proposals and  their 
representatives will commence in the coming days.



Charges associated with these proposals  are expected to be approximately  £28 
million and  will  be reflected  in  the  Company's 2012  and  2013  financial 
statements, with the majority of the  cash outflows to implement the  proposed 
changes taking place in 2013. The  Company expects to recover the majority  of 
the cash impact of  the proposed changes in  future periods through  realising 
site  disposals,  reduced  working  capital  requirements  and  lower  capital 
expenditure. On a pro forma basis, the savings from the proposed restructuring
are expected to offset the margin forgone from the lost bread contract.  These 
proposals are not expected to have an impact on 2012 Trading profit.



                                   < ends >



For further information please contact:



Premier Foods plc

Lisa Attenborough, Director of Communications
 +44 (0) 1727 815 850

Richard Godden, Head of Investor
Relations +44 (0) 1727 815 850



Maitland
+44 (0) 20 7379 5151

Tom Buchanan/Brian Hudspith



Notes to editors



1. As part of its Interim Management Statement for the three months ending
30 September, announced on 23 October 2012, the Company stated that following
a business review, and consistent with its approach to improving sustainable
profitability in Bread, it would be unable to renew a Bread contract it holds
with a retail customer. The contract loss accounts for approximately £75
million of annual sales, has very low margins, is costly to service and will
not affect 2012 performance.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


MSCFEDSMSFESEIF -0- Nov/20/2012 07:00 GMT
 
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