Premier Foods, the food conglomerate behind Hovis, has been forced to write down the value of its bread division by £282m, following a whopping 90.4% slump in profits.
Trading profits for its bread division were just £3.4m last year, in comparison to £35.3m in 2010.
Premier Foods, which also owns Mr Kipling, Bisto and Oxo, was pushed to an overall loss of £259.1m in 2011 because of the need to write down the value of the Hovis business on its balance sheet.
Bakery sales were down nearly 3% at £500.5m as fierce price activity in the market continued. Tesco also refused to stock certain Hovis products for a period, although this price dispute has now been settled.
The group, which has been struggling under a near £1bn debt mountain, following an acquisition programme that included the purchase of Mr Kipling owner RHM, last week announced a “landmark” £1.4bn refinancing deal.
Chief executive Michael Clarke said he was “very positive” about Premier’s future, adding that sales growth should return under plans to double market spend on eight core brands this year, which also include Batchelors and Ambrosia, as well as Hovis.
In its full-year results, Clarke said: “We intend to draw a line under the performance of 2011. Having put the financing and strategic building blocks in place, our immediate priorities are to implement this re-financing package, continue stabilising the business, re-focus the portfolio and invest in our future growth. While we recognise that the consumer environment remains challenging, our performance thus far in 2012 is in line with our expectations. I’m convinced we have the right team to turn this business around and I am very positive about our future.”