Premier Foods profit tumbles by 29pc

Britain's Premier Foods PLC (PFD.L) reported a 29 percent decline in profit from its ongoing businesses in 2011 and said it expected trading to remain challenging, impacted by high levels of promotional activity and cost inflation.

The group, which owns brands such as Hovis, Mr Kipling and Batchelors, said that it made a trading profit of £173.7m last year, down from £245.7m the year before.

Premier Foods also confirmed that it had received backing from its banks and pension scheme partners for a four and a half year re-financing package which will extend its bank facilities of £1.4bn until June 2016.

Its banking covenants have been re-set to support a new strategic plan, focusing on its major brands, and the company's pension schemes have agreed to defer deficit contributions until January 2014, Premier Foods said.

"We intend to draw a line under the performance of 2011," said chief executive Michael Clarke.

"Having put the financing and strategic building blocks in place, our immediate priorities are to implement this re-financing package, continue stabilising the business, re-focus the portfolio and invest in our future growth," he added.

Premier Foods, which said in January it would axe 600 jobs in Britain, is grappling with a hefty debt pile built up during a buying spree that was undermined by worsening trading conditions.