Premier turns loss to profit

The company, whose iconic brands include Hovis, Mr Kipling, Batchelor's, Quorn, Bisto, Ambrosia, Sharwood's, Branston, Oxo, and Hartley's saw total sales climb 2.2% to £2.6 billion during the year ended 31 December 2009 while pre-tax profits came in at £47 million as opposed to a loss of £405 million in 2008. Commenting on the results, CEO Robert Schofield said: "Premier Foods achieved a tremendous amount in 2009. We strengthened our balance sheet, cut debt, increased trading profits and returned to positive earnings. Most importantly we improved the performance of all our key brands in a highly competitive market place. "Today we're outlining our plans and ambitions for the next chapter in the successful growth of the business. We are laying out a series of key targets and performance indicators for the next three years and providing an even greater degree of transparency as befits a business of our scale. "We are confident that our business model is capable of continuing to capture share in our key market segments and delivering sustained earnings growth and cash generation over the medium term. We look forward to the next stage of the Group's development with determination and enthusiasm." Premier said its vision is to be "the best in British food with brands that you really love". However, the Group's strategy remained unchanged but now, with the integration of the RHM and Campbell's businesses behind it, Premier was focused on delivering organic growth over the next three years. The business model to deliver this growth is: • to grow branded sales faster than their respective markets by investing in and strengthening our brands and their relevance to today's consumers; • to gain competitive advantage by utilising consumer insight and scale to deliver value to customers and to work more effectively with suppliers; • to deliver efficiency benefits such that supply chain costs and overheads are held flat or decline while volumes grow; and as a result • to focus on cash generation and debt reduction. Looking ahead, the company said it planned to deliver efficiency savings over and above the synergies already delivered. Furthermore, these efficiencies should be deliverable without material access costs. In 2009, much of the benefit of the strategy had been absorbed by inflation in input costs and by a tougher consumer and trading environment which drove higher promotional costs. But Premier said it was confident that 2010 would be a successful first step of a three year journey of demonstrating the strategic direction of the business and of generating cash. It concluded: "We remain cautious about the consumer and trading environment for 2010. But, assuming no further adverse change in that environment, we expect the benefits of the strategy to result in further progress in 2010."