Premier Foods to sell RHM frozen foods business
July 09, 2007
by Eric Schroeder
LONDON — Premier Foods P.L.C., maker of Hovis bread, said it plans to sell its RHM frozen foods business. The business, which was acquired when Premier acquired RHM in December 2006, manufactures primarily retailer label products in the frozen pies, ready meals and desserts categories.
In addition, Premier announced the integration of Campbell Soup Co.’s U.K. and Irish unit has been completed, and the combination of RHM with the rest of its activities is on track.
The announcements were made in connection with Premier’s release of its trading update for the six months ended June 30. Interim results for the first half will be released on Sept. 4.
"The first half of 2007 will be seen as a step-change for Premier Foods," said Robert Schofield, chief executive officer. "We completed the integration of Campbell’s, a business one third our size, in April, just 8 months after the acquisition, and we have already made significant strides on the integration of RHM. We have confirmed the total annual synergies from both these acquisitions at £113 million and remain on track to deliver the combined £17 million of synergies targeted for 2007.
"Through this, underlying business performance has remained steady and whilst cost pressures, particularly wheat, are an issue, we expect to see branded growth across our business in the second half of the year and we remain confident that performance for the full year will meet our expectations for the group as a whole."
Updating on its bread bakeries business, Premier said sales for the division for the six months ended June 30 are expected to be in line with the comparable period in 2006, with price increases expected to offset competitor promotional activity. Trading profit in the division is expected to be lower due to increases in wheat prices through the spring and the impact of competitor promotional activity.
"We anticipate that we will need to recover the increased wheat costs through pricing in the coming weeks," the company said. "We have planned significant activity behind Hovis during the second half of the year with TV advertising behind our market-leading "Best of Both" bread and the launch of a new seeded Hovis loaf."