Premier Foods, which last month announced the sale of its Irish brands to Boyne Valley Group, has announced it is to cut 600 jobs in the UK in a bid to save £40 million by next year.
The debt-laden group, which was recently given extra time by its banks to get its finances in order, wants to reinvest the savings in growing its eight key brands, which are Mr Kipling, Hovis, Sharwoods, Batchelors, Ambrosia, Oxo, Lloyd Grossman and Bisto.
The St Albans-based company, which employs around 12,000 people, has been fighting for survival in recent months as profits plummet and it struggles to keep up with repayments on its £850 million debt mountain.
The planned job cuts, which are subject to a consultation process, are expected to focus on overhead functions and reflect the group’s reduced size following recent disposals such as Quorn and its canning operation.
The group announced the sale of its Irish brands to Boyne Valley Group in a deal worth more than €41 million last month.
The brands, which include McDonnells, Chivers, Erin and Gateaux, recorded turnover of €29.5 million and earnings before interest, depreciation, tax and amortisation of €10million in the year ended December 31st 2010, and had assets of €39.2 million.
Prior to the sale of its Irish brands, Premier employed over 50 people in Ireland.
The company also recently announced the sale of its chilled food division Brookes Avana to the 2 Sisters Food Group for a cash sum of £30 million..
Premier, which is Britain's largest food group, has seen its share price collapse from 34p to 5.75p over the past year after a series of profit warnings as shoppers increasingly switch to supermarket own-label brands and it is forced to put on more promotions to compete.
The company said today it will double marketing spend behind its core “power” brands this year, starting with television adverts for Sharwood’s and Lloyd Grossman next month.
Premier said trading over Christmas had been in line with its expectations but that results for 2011 will be towards the lower end of City hopes.
New chief executive Michael Clarke, who joined the business from Kraft, said: “While decisions to reduce the workforce are always difficult, I’m convinced we are taking the right steps in the long- term interests of the business, employees and our stakeholders.”
Additional reporting: PA
