Higher wheat costs hit trading profits at Premier Foods in September and October, the manufacturer reported in a trading update covering the four months to the end of October.
Premier said it had suffered because of consumers switching to other brands as it had been among the first plant bakers to raise the price of its bread when raw material costs rose.
In a statement, Premier said trading profit had been “significantly lower during September and October than the same period last year”. It said bread prices would continue to be affected while there was disparity between the retail sales value of its products and other bread brands.
The manufacturer said sales for the core business for the four months to October 2007 were ahead of the same period in 2006 by about 3%. There had been improved sales growth in spreads and desserts, it said. However, although the meat-free business also achieved improved sales growth, Premier said costs were running ahead of normal levels while it waited for for efficiency improvements at its Methwold factory to feed through.
“We are pleased with the performance of the Campbell’s business, which moved into good growth, although we have yet to see an improvement in the core convenience foods business,” said the company.
Sales for culinary brands in the four months to October were 3% ahead of the same period last year, sales at the bread bakeries division were “moderately ahead” of last year.
Premier said it had completed the rationalisation of its Bradford bakery and Telford distribution depot in October. The closure of its King’s Lynn Campbell’s factory is set for the end of 2007. The consultation with employees at the six manufacturing sites Premier had proposed to close after the RHM integration had started and transfer of production had begun, said the company.
The company has already announced the closure of its Dublin preserves factory and the start of consultations with employees on a proposal to close its factory in Thurles in the Republic of Ireland.