Premier suffers after Hovis woe

The maker of Hovis slumped to a loss today after a price war sliced its bread division’s profits to just £3.4 million last year.

Premier Foods – which also owns Bisto, Mr Kipling and Oxo – was pushed to an overall loss of £259.1m in 2011 because of the need to write down the value of the Hovis business on its balance sheet.

Bakery sales were down nearly 3 per cent at £500.5m as fierce price activity in a market that also includes Kingsmill continued. Tesco also refused to stock Hovis products, although this price dispute has now been settled.

St Albans-based Premier said the division’s trading profits slumped 90.4 per cent last year, leading it to slash the value of the bread arm by £282m.

The group, which has been struggling under a near £1 billion debt mountain following a spending spree that included Mr Kipling owner RHM, insisted it is on the mend after recently sealing a “landmark” £1.4bn refinancing deal.

Chief executive Michael Clarke said he was “very positive” about Premier’s future, adding that sales growth should return under plans to double market spend on eight core brands this year, which also include Batchelors and Ambrosia.