Premier Foods plans to divest non-core businesses and cut its workforce by about 600 jobs as part of cost cutting in response to weak consumer demand.
Premier, Britain’s biggest foods group, is on a cost cutting mission as consumer demand for its brands weakened in 2011. It said in a trading statement issued today that it was taking the action as it expects financial results for 2011 to be at the lower end of market expectations.
The company plans to focus on eight ‘power brands’ and sell non-core assets, such as the sale of its four Irish grocery brands in recent weeks.
Premier said it expects to more than double its original cost reduction target to over £40 million by 2013.
“Every aspect of the company’s costs is being reviewed and it is expected that a series of cost saving programmes will be initiated throughout the year that will result in reductions in the workforce, mainly from overhead functions,” said the statement.
“These reductions, which will be subject to appropriate consultations, are expected to amount to approximately 5% of the company’s current workforce of around 12,000 employees.@
In October, the Group stated that it would significantly exceed the £20 million cost savings by 2013 that it announced at the 2011 Half Year.
The new strategy is to focus the group on eight of its biggest brands while selling off other businesses as it aims to meet an already deferred covenant test from its banks by end-March 2012.
Reuters reported in January that Premier had plans to sell its Hartley’s jam business and Haywards, the pickes brand.
“Discussions with the company’s banks over a re-financing package continue to make progress and it is anticipated that an appropriate agreement will be reached soon,” Premier Foods said on Tuesday.
On Monday Premier Foods share price value the company at £138 million.