10th May 2007 07:01
Premier Foods plc10 May 2007 Premier Foods plc AGM statement Premier Foods ("Premier") is making the following trading update in advance ofits Annual General Meeting, which will be held today at 11am, at Haberdashers'Hall, 18 West Smithfield, London EC1A 9HQ. Premier 2007 trading Sales for January to March were in line with our expectations, although sales inApril have been impacted by the unusually warm weather. Our growth expectationsfor the business for 2007 are unchanged, particularly against the backdrop ofthe hot summer of 2006. We are pleased to have significantly reduced the decline in sales that theCampbell's portfolio was experiencing before its acquisition. We have a majorre-launch planned for Batchelor's and Oxo in the second half of this yearsupported by exciting innovation, which we are confident will increase thepositive momentum already established for the brands. We completed the acquisition of RHM on 16 March and have begun its integrationinto Premier. We remain excited about the opportunities that the combination ofthese two businesses bring for brand development and improved efficiency and areencouraged as we learn more about the underlying business, brands and people. RHM 2006/7 trading Results for RHM will be consolidated into Premier's results from 16 March 2007,the date the acquisition completed. The following update is for the 12 monthsended 28 April 2007, which was RHM's 2006/7 financial year. We anticipate that, overall, sales for RHM for 2006/7 will be slightly ahead ofthose for its 2005/6 financial year. As previously indicated, trading profitswere impacted by the increase in wheat prices in the autumn of 2006 and softertrading in the culinary brands business due to the extended period of warmerweather in the second half of 2006. This has been partly offset by thecontinued strong recovery of the Cakes division. Bread Bakeries achieved price increases in February, which offset the higherwheat prices from that point onwards. The relaunch of Kingsmill, one of Hovis'major competitors, supported by deep-price promotions has destabilised themarket over March and April. However, early indications show that as Kingsmillpromotions have ended, Hovis' market share has returned to its former levels,reflecting the strength of the Hovis brand. Trading for Culinary Brands has continued in line with its performance in thefirst half of the RHM 2006/7 financial year. Sales and trading profit have, likethe Premier base business, been impacted by the unusually hot weather in April. The Cakes division continued to progress with strong sales, trading profit andmargin growth and improved market share, driven by double digit sales growth forMr Kipling. Customer Partnerships continued to make steady progress with sales and operatingprofits for this division marginally ahead for the RHM 2006/7 financial year. RHM integration We are pleased to welcome Miles Warnick, Tim Kelly and Mark Hughes to theexecutive management team at Premier. Miles and Tim will continue in theirroles as Chief Operating Officers of the Bread Bakeries and the Cakes & CustomerPartnerships divisions respectively. Mark has been appointed as GroupProcurement Director for the whole of Premier. Following completion of the acquisition we have reviewed the scope and timing ofour cost synergy estimates and have confirmed the achievability of the £85mannual savings targeted. We have announced a proposal to close the RHM head office in Marlow, which isplanned to be completed by the end of June 2007. We have also moved rapidly to commence the full integration of the CulinaryBrands business and have announced proposals to close its head office inAddlestone. We have developed new organisational structures combining thePremier and Culinary Brands operations and consultation with affected staff isunderway. We have initiated a review of the manufacturing network of the combinedbusinesses covering the Premier ambient factories, the Culinary Brands factoriesand Ledbury preserves. In order to optimise the level of synergies, we have puton hold the closure of our Ashford factory, scheduled for June 2008, whilst weconduct the review due to the high degree of overlap between it and some of theRHM sites' capabilities. We anticipate that this review will be completed bythe end of May 2007, following which we will communicate any proposals toemployees. The closure of the Campbell's King's Lynn site will proceed asplanned and is scheduled to be completed by December 2007. We intend to release results for RHM restated into calendar first half andsecond half 2006 in June 2007, bringing them into line with Premier reporting. Campbell's integration The integration of all the Campbell's administration functions has now beencompleted, on schedule and to budget, with the closure of the office inCambourne at the end of April. The current synergy run rate confirms theanticipated £7m of cost synergies scheduled to be delivered in 2007 and weremain confident that the total of £28m of annual cost synergies identified willbe delivered in full and in line with the schedule previously communicated. Enquiries: Premier Foods plc Tel: 01727 815 850 Robert Schofield, Chief Executive Paul Thomas, Finance Director Gwyn Tyley, Investor Relations Manager Citigate Dewe Rogerson Tel: 020 7638 9571 Michael Berkeley Justin Griffiths Nicola Smith This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Premier Foods