Premier’s full-year profits hit by soaring costs

MR KIPLING cakes firm Premier Foods has served up falling fullyear profits as the company battles soaring costs.

The group said adjusted pretax profit fell 11.8 per cent to £74.2m in the year to April 1, down from £84.2m in 2016.

Underlying revenue fell 1.4 per cent to £790.4m in the period, with chief executive Gavin Darby flagging a “challenging year”.

He said: “This financial year has been a challenging one for the industry, with the return of food inflation and changing retailer promotional strategies.

“With the industry changing rapidly, we have updated our strategy to give an equal focus to revenue growth, cost efficiencies and cash generation. In the UK, growing ahead of our categories continues to be a core objective for us and our plans for international are for further strong growth.”

The group, which also owns a raft of household brands including Oxo and Batchelors, has been stung with surging costs of commodities such as sugar, chocolate, dairy, wheat and palm oil, as well as the collapse in the pound.

In January, the firm warned annual profits would be around 10 per cent lower than expected and unveiled a “substantial” costcutting plan, weeks after confirming it was in talks with supermarket giants and retailers over price hikes.

Premier said it would take a “blended approach” to managing cost increases, including looking at “limited price increases where these cannot be avoided”. Plans to slash costs throughout its supply chain are expected to yield £20m over the next two years.

Mark Jones, a food and drink solicitor at Leeds-based law firm Gordons, said: “Premier Foods’ latest announcement on shifting its strategy to cost reduction and profit reflects what has been happening in the packaged food market over the last six months or so.”