London / UK. (pf) Premier Foods PLC notes the recent press reports in the United Kingdom regarding potential investment in its Bread business. The Company confirms it has appointed Ondra Partners to assist in developing investment options for the Bread business, which include co-investment by a partner. There can be no certainty that a transaction will follow at any point in the future, but the Company will provide updates as appropriate.
The Premier Foods Bread division is the largest vertically integrated baker and flour miller in the United Kingdom. The Bread business operates principally in the wrapped bread market although the company also produce morning goods, a wide range of bulk and branded flours and a variety of own-label bread and other bakery products. The Charnwood pizza base operation is also part of this business. Hovis is amongst the top five grocery brands in the UK. Other brands include Mother´s Pride and Granary.
Q3/2013: Bread business in the three months ending 30 September
In Q3/2013 sales in the Bread business (excluding Milling and a high cost to serve contract exited in April) were 1,5 percent behind the same period last year reflecting a slower start to the quarter as a result of the hotter July weather. However, performance improved through the quarter, supported by progressively stronger customer partnerships. In particular, Premier Foods is starting to benefit from substantial increases in space and distribution across both the larger supermarket and convenience formats of major customers. The yield and quality of the UK wheat harvest has also improved compared to last year and reflect long-term average outputs. This year, the Bread business has focused on a major restructuring programme, involving the closure of three bakeries, two mills and a significantly reconfigured logistics network. The Greenford bakery closed in the third quarter and production at the Barry Mill finished in October. Restructuring costs associated with this programme are unchanged and expect to be approximately 28 million GBP in the full year. Milling sales were up 15,1 percent in the quarter, largely reflecting higher pricing compared to the same period last year.