Premier Foods has issued another profit warning as the fall-out from its dispute with Tesco earlier this year continues to manifest itself.
In an interim management statement Premier Foods said that total sales had fallend 3.6% to £477m for the three months to 30 September, with Premier admitting that “slower than expected rebuilding of in-store presence following a customer dispute” had hit volumes.
Tesco de-listed a quarter of Premier’s branded products between 26 March and 24 June, costing the supplier £10m and forcing it to warn investors of its impact.
The group said grocery volumes had fallen 8% in the most recent period, with branded sales down 6%. Sales of Hovis were also down more than 6%, with volumes declining 13.5%.
Last Friday, new chief executive Michael Clarke set out his plans for the food manufacturer.The new boss said his immediate priority would be to conclude discussions with the banks to revise the company’s borrowing terms and secure a refinancing plan.
Clarke said Premier would focus investment on eight key brands: Ambrosia; Batchelor’s; Bisto; Hovis; Loyd Grossman; Mr Kipling; Oxo; and Sharwood’s.
He added: “While the current trading performance continues to be disappointing and significantly behind our expectations, we have already identified a number of steps to build a more profitable business. Our immediate priority is to conclude discussions with the banks to revise our banking covenants and put in place refinancing facilities. This process is well underway and we are hoping to reach a successful conclusion in due course.”