Premier Foods' H1 net loss narrows to £11.7M, from £40.3M a year ago despite higher raw materials costs, but revenue down 2.7% to £1.09B on lower demand

HERTFORDSHIRE, England , August 5, 2011 (press release) – INTERIM RESULTS FOR THE HALF YEAR ENDED 25 JUNE 2011

5 August 2011

Key figures (£m)

  2011 2010 %
Total pro forma sales from ongoing business   974  982  (0.9)
Trading profit from ongoing business  67  94  (28.7)
Operating profit for continuing operations  42  63  (33.3)
Loss before tax for continuing operations  (3)  (58)  94.8
Net debt  1,139  1,364 16.5 
  Highlights

* Challenging trading conditions due to consumer environment and raw material cost inflation;
* Pricing implemented to cover raw material inflation albeit with a £25m total cost of both a timing lag and a temporary customer dispute;
* Sale of Meat-free business completed in the Half Year and Canning business completed in July raising a total of £362m;
* Net debt £1,139m, down £225m year on year. Average debt to EBITDA 4.45x. Pro forma net debt £972m once Canning proceeds received. Average debt to EBITDA 4.00x on a pro forma basis after disposals;
* Logistics and head office restructuring will yield £20m in annual savings by 2013;
* Mike Clarke joins on 1 September as Chief Executive Officer.

Commenting on the results, Chief Financial Officer, Jim Smart said:

“This was a challenging period not only for Premier Foods but also for the food industry as a whole. We faced a combination of reduced consumer spending and significant raw material inflation. We were further hampered by a temporary pricing dispute with one of our major customers which has since been resolved and by underperformance at Brookes Avana.

“We were successful in passing on the majority of our higher input costs, completed two significant disposals and reduced our borrowings. We have continued to deliver efficiencies in line with our targets and have now commenced a further cost saving programme.”

A presentation to analysts and investors will take place on Friday 5 August 2011 at 9.00am at City Presentation Centre, 4 Chiswell Street, London, EC1Y 4UP. The presentation will also be webcast at www.premierfoods.co.uk.

1. The accounting period is from 1 January 2011 to 25 June 2011. The comparative is based on 1 January 2010 to 26 June 2010. The 2011 period thus contains one fewer trading day. In order to present consistent information, we also present pro forma sales information for the 6 months to 30 June.

2. In the interests of clarity the results of the Group excluding the Meat-free and Canning businesses are shown as Ongoing Business. In the financial information the results of the Meat-free business are shown as discontinued operations and the results of the Canning business are included within continuing operations within the Grocery segment.

3. Trading profit is defined as operating profit before exceptional items, amortisation of intangible assets, the revaluation of foreign exchange and other derivative contracts under IAS 39 and pension credits or charges in relation to the difference between expected return on pension assets, administration costs and interest costs on pension liabilities.

4. Pro forma adjusted profit after tax is defined as trading profit less pro forma net regular interest payable less a notional tax charge at 26.0% (2010: 28.0%).

5. Pro forma net regular interest is defined as net interest after excluding non-cash items, namely exceptional write-off of financing costs, accelerated amortisation of debt issuance costs, fair value adjustments on interest rate financial instruments and the unwind of the discount on provisions, adjusted to show the effect as if the disposals of the Meat-free and canning businesses had happened on 1 January 2010.

6. Pro forma adjusted EPS is defined as pro forma adjusted profit divided by the weighted average number of ordinary shares of the Company.

7. Net debt is defined as net borrowings less obligations due under finance leases.

8. Comparatives have been restated to reflect the classification of the Meat-free business as a discontinued operation.

The full announcement is available below:

PremierFoodsHalfYearResultsending25June2011[1].pdf

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