Premier Foods to hit cost saving target early after strong sales

 
City A.M. Reporter
AUSTERITY is paying off for Premier Foods. The debt laden owner of iconic British food brands -- from Hovis bread to Mr Kipling confectionery -- is on track to axe £40bn in costs in 2012, allowing it to reach its savings target a year early.

Premier also boasted strong first-half sales across many of its key products, boosting trading profit by three per cent to £72.2m.

However, revenues from ongoing businesses slipped 2.3 per cent to £852.3m.

Sales of the groups core Power Brands improved by two per cent to £418.9m, owing to strong performances by Loyd Grossman, Batchelors and Mr Kipling.

However, rising wheat prices following severe drought in key growing countries could dampen margins in Premier’s bread business, which accounts for approximately a third of total sales. Profit from the bread business fell by 1.7 per cent to £253.1m in the first half of the year.

“Across our portfolio we are managing commodity fluctuations very well. The only area which is proving to be an exception area is wheat. It is the only area where we are looking to pass on prices,” said chief executive Mike Clark.