Premier Foods names acting boss amid sales woes
Mr Kipling Cakes firm Premier Foods named its finance chief as interim chief executive as it revealed tumbling sweet treat and overseas sales.
The group, which also owns other well-known brands including Bisto and Oxo, said chief financial officer Alastair Murray will take over on February 1 to replace outgoing boss Gavin Darby on an interim basis while the hunt for a permanent successor continues.
Mr Darby is leaving at the end of the month after Premier announced his departure in November in the wake of pressure from activist hedge fund Oasis Management.
Mr Darby’s departure on January 31 comes just months after he narrowly survived a shareholder rebellion against his re-election.
The announcement came as Premier Foods said group sales fell 2.2% in its third quarter to December 29, with sweet treat revenues off 6.9% due to “implementation challenges associated with its logistics programme”.
Non-branded sweet treat sales plunged 20.7% in the quarter as it also pulled out of a number of lower margin seasonal and non-seasonal cake contracts.
Premier added that it remains in talks over a potential sale of its Ambrosia brand and its factory in Lifton, Devon.
It first revealed discussions in November as the group looks to boost its performance and slash its £500 million debt pile.
But the firm said efforts to cut debts will be hampered by previously announced moves to stockpile raw ingredients ahead of Brexit.
It said the rate of debt reduction will be slower over the full year than in 2017-18 as it builds inventories “to protect against the risk of delays at ports in the absence of certainty over the UK’s departure from the EU”.
But it stressed long-term debt targets remain unaffected.
On third-quarter trading, Mr Darby said: “We faced into two sets of challenges in the quarter – lower international sales and our logistics programme, which as expected, affected cake sales volumes early in the quarter.
“As we look to the fourth quarter, we expect to see a good performance from branded sweet treats, we have a good innovation plan lined up, and our expectations for trading profit and adjusted earnings per share for the full year are unchanged.”
International sales tumbled by 27% in the quarter amid efforts to push through price rises to export wholesalers.
Grocery sales dipped 0.1% in the quarter, but the group said Mr Kipling performed well, with sales up 5% in the quarter and 10% in the year to date.