SHARES in Premier Foods, the maker of Mr Kipling cakes and Hovis bread, jumped more than nine per cent yesterday after cost cuts helped the group to report a 50 per cent leap in underlying profits.
The food group said underlying trading profit increased to £47.4m in the six months to 30 June, benefiting from cost savings made last year and another £20m worth delivered in the period.
Debt during the period fell from £951m to £890m, while overall group losses narrowed to £23.5m from £45.8m in the same period last year.
“A 50 per cent increase in trading profit is a very encouraging result given the highly competitive environment,” the firm’s chief executive Gavin Darby said.
He also announced plans to deliver a further £10m in savings in the second half of the year by halving the number of suppliers and shedding underperforming products within its brands.
The group said this would help push annual trading profit to around £146m, at the top end of investors’ expectations.
After refinancing and selling assets last year to help reduce debt built up before the financial crisis, Premier Foods is stepping up marketing for its eight best-selling brands, such as Batchelors, Ambrosia and Bisto gravy. It is also shaking up its bread unit to improve profitability.