A mid afternoon missive to the market usually spells trouble, and so it proved with the latest unexpected trading update from Premier Foods.
The food producer had looked to be getting its act together in recent months, completing a series of non-core disposals that had restored some degree of sanity to its previously overstretched balance sheet. However, trading continues to be very poor and profits this year have been hit by a shopping list of problems. These include a £15m hit from higher commodity costs, a row with Tesco that led to the delisting of some products and cost it another £10m, and the loss of a pie contract with Marks and Spencer that will see profits at its private label manufacturing business Brooks Avana £10m lower in the first half.
Broker Panmure Gordon has cut its full year pre-tax profit forecast by £38m to £115m, giving EPS of 3.5p.
When: 25/02/11
Price: 28p
Performance to date: -35%
