THE owner of Hovis yesterday unveiled plans to close two bakeries and cut 900 jobs to compensate for the loss of a £75 million-a-year contract.
Premier Foods, which also makes Mr Kipling cakes and Bisto gravy, will close factories in Birmingham and London as well as distribution sites at Plymouth and in Suffolk next year.
The company said the cuts made sense after it decided not to renew its bread contract with the Co-op last month. The measures will cost about £28m, much of which Premier expects to get back by selling the sites and through lower capital expenditure next year.
Chief executive Michael Clarke said: “It is critical that we act to assure the long-term future of the bread division.”
Analyst Martin Deboo, at Investec, welcomed the move which he said would improve long-term profitability and give Premier the option of an eventual, profitable sale of Hovis.
He said the Co-op contract was expensive to serve and he thought Premier’s prediction that the cuts will merely offset the lost margin was conservative.