Can new appointments revitalise Premier Foods?

By Elaine Watson

- Last updated on GMT

Related tags Board of directors

Can new appointments revitalise Premier Foods?
City analysts are hoping two new additions to Premier Foods’ senior management team can inject new urgency into the business before refinancing issues loom large again.

Ronnie Bell (pictured), the new non-executive chairman, has 30 years’ experience with Kraft, culminating in five years as president of Kraft Foods Europe, during which time he was responsible for all of its coffee, chocolate and grocery brands in the region.

Charles Miller Smith, Premier's new non-executive deputy chairman, is the former chief executive and chairman of ICI.

Analysts at Panmure Gordon predicted Premier’s shareholders would be keen to meet with the duo as soon as possible “given Premier's continued unimpressive trading performance and very weak share price".

They added: “The question for investors is whether they will be able to inject new urgency into the group, which probably has a two-year window before refinancing issues loom large again, and whether shareholders could - or should - press them for further management change.”

But with three months still to go before they even get to work (both start on October 1), “there are unlikely to be quick answers”.

What future for Premier?

Premier Foods' chief executive Robert Schofield has faced mounting criticism​ from City analysts in recent months as the firm’s share price​ has continued to drop.

Investec analyst Martin Deboo has been particularly vocal, recently suggesting that the market had simply “lost confidence in Premier’s leadership”.

Deboo outlined four possible scenarios for Premier: ‘Freefall​’ – in which trading continued to decline and no action was taken to sell assets or change the senior management; ‘Zombie Company​’ – in which “trading flatlines but Premier stays within its covenants”​; ‘Rapid takeout’​ – in which Premier’s low valuation flushed out a financial or strategic buyer (private equity or possibly Associated British Foods); and finally, ‘Turnaround​’ – in which management was overhauled, trading improved and disposals were made “at decent prices”.

Were Premier’s low valuation to attract a buyer, this would “most probably be a financial buyer"​, he predicted. “We see a trade buyer as less likely, but wouldn’t rule out Associated British Foods if they can find a solution to any resultant concentration issues in bread.”

As previously announced, David Kappler will step down as chairman and as a non-executive director following the appointments.Bell has stepped down as a non-executive director at Northern Foods, but remains on the board of Milk Link.

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