A thinner slice for Hovis as its owner Premier sees brand lose out to rivals

The company reported an overall loss of £259.1m in 2011 because of the need to write down the value of the Hovis division on its balance sheet.

Bakery sales were down nearly three per cent at £500.5m following fierce competition with rival Kingsmill.

Premier said it will have to sell more assets to turn the business around.

The group, which also owns Mr Kipling, Bisto and Oxo gravy and Batchelors soups, has debts of close to £1bn which it built up during a spending spree prior to the 2007 credit crunch.

The group has committed to making £330m from disposals by June 2014, in addition to the £400m raised from the sale of Quorn meat substitute and Hartley’s jam.

Chief Executive Michael Clarke, who joined Premier Foods from Kraft last September, declined to comment on which businesses would be sold.

Analysts believe the group’s preserves and vinegar businesses would fetch around £150m and £25m respectively.

Premier Foods made a trading profit of £173.7m last year, down 29 per cent on the year before.

“The performance in 2011 exposed some deep underlying issues,” said Mr Clarke. “The company has cumulatively underinvested in its brands and failed to build strong customer relationships.”

He wants to strengthen the relationship with retailers after a pricing row with Tesco, which led to the retailer temporarily refusing to stock its products.