Food firm Premier in profits warning

Premier Foods, which also owns brands such as Indian foods label Sharwood’s and Batchelor’s soup, said sales volumes had fallen eight per cent in the three months to September 30. Hovis saw volumes drop 13.5 per cent in the period.

The heavily indebted group, which also owns Ambrosia and Bisto, said it would sell off a number of businesses to focus on eight “power brands” in a bid to drive future growth.

Michael Clarke, Premier chief executive, who took the top post in August, said the trading performance was “significantly below expectations” and the company will not meet last year’s profit in the second half as previously expected.

Premier said it was holding talks with lenders to prevent it from breaching agreements - which will be tested at the end of the year - over its debt.

Mr Clarke, who joined the business from Kraft, said he hoped the discussions would “reach a successful conclusion in due course”.

Premier said full-year profit expectations were between £214m and £232m - but it no longer expected to meet that range. Trading profit in the year to December 31 was £311m.

The St Albans-based manufacturer also said its net debt would be higher than the £850m forecast for the full year.

Mr Clarke refused to identify brands which would be up for sale but would not rule out any of the labels outside the so-called “power eight”.

Meanwhile, Mr Clarke said a previous price spat with Tesco - which saw the supermarket pull a number of its brands, including Hovis - was still hurting business.