Premier Foods tanks on profit warning

Mr Kipling cakes firm Premier Foods said group sales fell by 1% in the third quarter despite strong December trading

In early Wednesday trading, shares were down 15 per cent.

The company said six out of its eight major brands gained volume and market share, while its global business grew 15 per cent, its ninth consecutive quarter of growth.

The cost saving scheme would support Premier Foods's goals of improving profit and free cash flow, while also investing in innovation and consumer marketing, the firm said.

Chief executive Gavin Darby said announced a range of efficiency measures expected to save the company £10 million in its next financial year, particularly focused on its warehousing and distribution operations.

The UK food manufacturer said its profits would be 10% lower this year due to rising costs.

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Sales in its grocery business fell 1.9 per cent, while sales in its sweet treats arm edged up one per cent - with over 216m mince pies sold in 2016, up 17 per cent on the previous year.

Premier Foods plc (PFD.L) reported Group sales in the third quarter of 251.4 million pounds, 1.0% lower than the same period past year. Branded sales dropped by 3.8% across the quarter, offset by a 13% increase in non-branded sales.

Experts at Jefferies added that Premier's third-quarter sales result was "a disappointing performance", given that it came against weak trading from a year earlier.

The recovery of "significant input cost inflation" is taking longer than originally foreseen, the company said in a statement Wednesday, a reference to price negotiations with grocers brought about by a Brexit-induced slide in sterling.

Premier's shares have been under pressure after a hard 2016 for the group, with its management under fire over its rejection of takeover advances from Schwartz spice United States owner McCormick & Company, commodity price rises and a knock to sales from warmer-than-expected autumn weather. "Consequently, we now expect Trading Profit for FY16/17 to be approximately 10% below previous expectations".

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