Premier on track as it sells frozen division

Premier Foods said its full-year results were in line with its expectations as it announced the sale of its RHM own-label frozen foods business.

Chief executive Robert Schofield said the company had completed its integration of Campbell’s and significant progress had been made in integrating RHM after acquiring it in March.

The firm said it would sell RHM’s frozen food business as part of its ongoing review of its activities. The business makes frozen pies, ready meals and desserts under retailer labels and is part of the Customer Partnerships division.

“We completed the integration of Campbell’s, a business one third of our size, in April, just eight months after the acquisition and we have already made significant strides on the integration of RHM,” said Schofield. “We have confirmed the total annual synergies from both these acquisitions at £113M and remain on track to deliver the combined £17M worth of synergies targeted for 2007.”

“Through this, underlying business performance has remained steady and while cost pressures, particularly wheat, are an issue, we expect to see branded growth across our business in the second half of the year and we remain confident that performance for the full year will meet our expectations for the group as a whole.”

Premier Foods said it cut promotional activity for Quorn and Cauldron while transferring production to its new facility at Methwold, Norfolk, limiting its growth in meat-free products. It has also begun to build a £35M fermentation unit at its Belasis factory in Teesside to support further planned growth for Quorn. It expects to complete this in two years.

The company said sales in the first half of 2007 would be boosted by the acquisition of Campbell’s and RHM. However, like-for-like sales would be slightly behind last year as a result of the exit from several low margin own-label contracts and a high level of promotional activity behind its branded beans in the first half of 2006.

It expects to see branded growth across its ambient business in the second half of the year as plans for RHM and Campbell’s take effect.

Premier Foods closed RHM’s Marlow office at the end of June and aims to save £85M by combining Premier and RHM. The company announced plans last week to close six manufacturing sites​, consolidating production into five sites.