Premier Foods has announced that it will be closing two of its bakeries and cutting 900 jobs from its bread division.
In a bid to simplify its manufacturing and distribution operations, the Company today announced that it will be closing two bakery sites in Greenford, west London and Birmingham during the course of 2013. It will also be removing around 130 of its distribution routes.
The bakery closures are in addition to the closure of the Company’s Eastleigh bakery, announced earlier this year.
Commenting on the proposals, Michael Clarke, Chief Executive Officer of Premier Foods said:
“Having generated solid growth momentum in our grocery division, it is critical that we act to assure the long-term future of the bread division. By simplifying our cost base, we can increase focus on improving efficiency, quality and service levels to help grow our core Hovis business.
“We recognise the impact these actions will have for our employees at the sites affected. Decisions will not be taken lightly but they are necessary if we are to build a strong and successful future for the bread division and those who remain with our business”.
Appropriate consultations with employees affected by the proposals and their representatives will commence in the coming days.
Charges associated with these proposals are expected to be approximately £28 million and will be reflected in the Company’s 2012 and 2013 financial statements, with the majority of the cash outflows to implement the proposed changes taking place in 2013.
The Company expects to recover the majority of the cash impact of the proposed changes in future periods through realising site disposals, reduced working capital requirements and lower capital expenditure. On a pro forma basis, the savings from the proposed restructuring are expected to offset the margin forgone from the lost bread contract. These proposals are not expected to have an impact on 2012 Trading profit.