Premier Foods saw half-year profits slump by a third today as food costs soared and sales of key brands such as Mr Kipling, Batchelor’s and Oxo tumbled.
Operating profits in the six months to 25 June fell to £42m from £63m a year earlier after food costs rose by £150m but delays in passing on the increase resulted in a £15m hit.
A dispute with a major customer, understood to be Tesco, over the higher prices and which saw a number of its major brands withdrawn cost it an additional £10m.
Sales of Mr Kipling cakes fell by 4.5% to £59m in the half year, while Loyd Grossman sauces slumped £6m to £15m, Batchelor’s soup fell £5m to £45m and Oxo dropped 22% to £14m.
It said Ambrosia, Sharwood’s and Loyd Grossman sales were particularly affected by the customer dispute, while Loyd Grossman and Mr Kipling sales in other customers were also affected by lower promotional spend.
The highly-indebted group cut its borrowings by £225m to £1.14bn as it completed the sale of its canning businesses and Quorn meat-free brands.