Hard to swallow

4 March 2008 By George Hay Follow @gfhay

Shares in the heavily indebted food manufacturer shot up 10% today after it struck a new deal with its banks and halved its dividend. But the company is eating into capex this year rather than its huge debt pile. If 2008 is as bad as last year, it’ll have to go back to its banks.

This content is for Subscribers only

Context News

Premier Foods has announced a 24.3% drop in 2007 operating profits following its acquisition of RHM and Campbell Soups last year.

The losses were caused by a 48% drop in trading profits (operating profits before exceptional items) in Premier's bread business, as well as a 9.7% trading profit drop in the company's spreads, desserts and beverages division and a 5.9% drop in trading profit in Convenience Foods.

However, investors were heartened that Premier had rearranged its debt with its banks. Premier's ebitda will have to be at least 4.5 times its interest payments by the end of 2008. Shares fell from an initial 10% spurt but were still trading 7.8% up at 99p by midafternoon.

Email a friend

Please complete the form below.

Required fields *