food producer Premier Foods said it expected to post full-year results at the top end of forecasts after cost cuts helped the group to report a 50 percent leap in first-half trading profit.The firm said it now expected free cash flow for the year to be between 50 and 70 million pounds, higher than a previous range of 40-60 million.
The debt-laden maker of Mr Kipling cakes and Hovis bread said on Tuesday underlying trading profit jumped to 47.4 million pounds ($73 million) in the six months to June 30, largely due to 20 million pounds of cost savings delivered in the period.
The group said working with fewer suppliers would also deliver a further 10 million pounds of cost savings in the second half of the year and help push annual trading profit to around the top of market expectations.
Following an action packed 2012 of refinancing and asset disposals to help reduce debt built up before the financial crisis, Premier Foods is shaking-up its bread unit to improve its profitability and stepping up marketing campaigns for its slimmed-down core portfolio of eight best-selling brands.
"A 50 percent increase in trading profit is a very encouraging result given the highly competitive environment. This shows that our turnaround strategy is delivering at the bottom line," said Chief Executive Gavin Darby, adding the restructuring of its bread business was ahead of plan.
Total underlying sales fell 0.9 percent, with a 3.2 percent rise in best selling brands like Hovis, Ambrosia and Bisto gravy offset by a 5.1 percent fall in lower margin products.
Net debt stood at 890.4 million pounds.
Shares in the firm closed at 85 pence on Monday, down 28 percent on six months ago, valuing the business at around 200 million pounds. ($1 = 0.6506 British pounds)
