By Muhammed Husain
– Premier Foods plans to close a manufacturing site in Britain, putting about 300 jobs at risk, after the maker of Mr Kipling cakes and OXO cubes reported a rise in third-quarter sales.
The group said it expected to incur cash exceptional costs of about 10 million pounds ($12.34 million) in fiscal year 2023/2024 from its plans to shut of its Knighton site.
Knighton, in Staffordshire in central England, makes mainly non-branded powdered beverages, so is not aligned to the group’s branded growth model strategy and is marginally unprofitable at trading profit, Premier said.
Premier said it was entering into consultation with staff on its proposed closure.
The company’s sales rose 12% in the three months ended Dec. 31, as inflationary pressures on consumer budgets failed to dent Christmas spending and demand for the group’s cakes and sauces.
Premier Foods’ performance was in line with Britain’s biggest retailers, which recorded better than expected Christmas sales as festive treats sold well despite a deep cost-of-living crisis.
Jefferies said Premier Foods’ sales look strong in the wake of the quarterly earnings of supermarkets, including Tesco and Sainsbury, providing “further evidence of a strong Christmas in UK consumer-land that has belied our ‘winter of discontent’ prognostications.”
But the group, one of UK’s largest food suppliers to retail and wholesale customers, retained its full-year outlook, and said that input cost inflation remained high.
It said it was offsetting these pressures by raising prices annually and cutting expenditure.
Britain’s grocery and food manufacturing sector is facing tough cost pressures and supply disruptions, with surging prices having caused the biggest squeeze on UK household income since at least the 1950s.
($1 = 0.8103 pounds)