Premier Foods to close two plants in the U.K.

by Eric Schroeder
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LONDON — Premier Foods, which earlier announced the closing of its Eastleigh bakery, said it plans to close two additional facilities in Greenford and Birmingham during 2013. The company intends to consolidate production from the locations into its remaining bread manufacturing sites.

In addition to the plant closings, Premier plans to simplify its bread distribution network by removing approximately 130 distribution routes, taking into account the reduction in volumes from the previously announced loss of a low margin bread contract by mid-2013. As a consequence, the company is proposing to close distribution operations in Greenford, Birmingham, Mendlesham and Plymouth. Premier also plans to restructure its outsourced logistics operations to optimize the new network.

Together, the proposals are expected to result in approximately 900 fewer jobs across the company’s bread division.

“Having generated solid growth momentum in our grocery division, it is critical that we act to assure the long-term future of the bread division,” said Michael Clarke, chief executive officer. “By simplifying our cost base, we can increase focus on improving efficiency, quality and service levels to help grow our core Hovis business. We recognize the impact these actions will have for our employees at the sites affected. Decisions will not be taken lightly but they are necessary if we are to build a strong and successful future for the bread division and those who remain with our business.”

Charges associated with the proposals are expected to be approximately £28 million ($44.6 million) and will be reflected in the company’s 2012 and 2013 financial statements, with the majority of the cash outflows to implement the proposed changes taking place in 2013, Premier said.

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