LONDON — The Bread division of Premier Foods P.L.C. posted profit of £3.4 million ($5.4 million) in the year ended Dec. 31, 2011, down 90% from £35.3 million in fiscal 2010. The decline reflected the reallocation of costs previously absorbed by the discontinued Brookes Avana business. Total sales in the Bread division rose 3% to £711.3 million ($1,130 million).
“Sales in our bakery operations were down 2.9% in the year while milling sales increased by 22.3%, largely due to higher pricing compared to the previous year to cover higher raw material costs,” the company said.
“The performance of the bakery business reflected challenging market conditions, with category volumes down 3.3% during the year. High levels of promotional activity remained a key feature of the market and as a result, trading profit was lower in the year. Hovis branded market share was broadly flat during the year, while non-branded volumes were lower, partly as a result of a contract loss.”
Overall, Premier Foods posted trading profit in the year ended Dec. 31 of £173.7 million ($281.9 million), down 29% from £245.7 million in fiscal 2010. Sales totaled £1,811 million ($2,879 million), down 3% from £1,874.7 million.
Premier Foods also announced it has obtained a £1.4 billion re-financing package until June 2016.
“I’m delighted that we have been able to reach a positive outcome with our banking and pension scheme partners,” said Michael Clarke, chief executive officer. “The consent for this re-financing package represents a strong sign of confidence and support for the business, its strategies and growth plans. This is great news for our employees and all of our stakeholders.
“We intend to draw a line under the performance of 2011. Having put the financing and strategic building blocks in place, our immediate priorities are to implement this re-financing package, continue stabilizing the business, re-focus the portfolio and invest in our future growth.”