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Premier Foods gets £33m cash boost after pension deficit payments suspended
The UK food giant reached an agreement with the RHM Pension Scheme Trustee to suspend payments earlier than previously expected.
This is because of the strong performance of the pension scheme following the segregated merger in June 2020.
As a result, Premier Foods will benefit from £33m increased free cash flow for the financial year ending 29 March 2025 and anticipates that no further contributions will be payable after this date, subject to the results of the next triennial valuation.
Administration costs associated with running the pension scheme of close to £5m per year and the dividend match mechanism are currently unchanged.
Premier Foods, which manufactures products for brands including My Kipling, Bisto and Cadbury, employs more than 4,000 members of staff that operate from 15 sites across the UK. The group supplies a range of retail, wholesale and foodservice customers.
Commenting on the development, Premier Foods chief financial officer Duncan Leggett said: “The further significant progress in the funding position of the pension scheme has enabled us to take another important step to expected full resolution of the scheme by the end of 2026.
“This suspension of pension payments substantially increases the free cash flow available to us and presents us with enhanced capital allocation options to deliver on our growth ambitions. The scheme has reached this position following strong stewardship by the trustee over many years and we will continue to work collaboratively with them to further de-risk the scheme.”
Meanwhile, Premier Foods enjoyed its “biggest ever Christmas” in 2023, with group sales up 14.4% year-on-year during Q3. Sales for the quarter were valued at £352.7m, up from £308.2m for the same period in 2022/23, a result that puts the group on track to meet its raised profit expectations for the full financial year.
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