Premier Foods’ Power Brand plan in doubt
Premier has reinforced a focus on its eight Power Brands as a key strategy in tackling a “massive” pension responsibility and soaring debt. Analysts have predicted disposals as a result.
However, experts have questioned the viability of the plan with the current market adversely affected by the current “tough” economic climate.
Clive Black, an analyst at Shore Capital said: “A new strategy has been set out that seeks to focus on eight core brands, implying the de-construction of prior regimes' master plans, and so a material programme of disposals.
“In credit and consumer constrained markets, however, it is hard to see how top of the market prices can be achieved and it remains our view that all of Premier Foods is effectively for sale.”
Pension responsibilities
This has been the case for some time but the pension responsibilities and debt are too great a millstone for suitors to encounter, he added.
The firm’s faith in the plan has been rocked in recent weeks following the news that three children were hospitalised after eating a Loyd Grossman korma sauce.
The firm ordered a recall of a batch of 350g jars of Loyd Grossman Korma sauce, with a best-before date of February 13, on Sunday (November 13) after announcing that two members of the same family had been hospitalised from the illness in Scotland.
A third child from the same family was hospitalised later that week as the Food Standards Agency carried out an investigation into the incident.
The firm received a boost last week however, after early stages of the investigation showed that no contamination had occurred at the firm’s factory in Bury St Edmunds. The investigation is now focusing on whether contamination could have occurred during transport or retail of the product.
Annus horribilis
The scare was the latest setback for the firm in a year which analysts have described as an “annus horribilis”.
Prior to the botulism scare, the firm was forced to delay a covenants test with its banks, due at the end of December, as it battled to tackle its mounting debt.
Meanwhile, Premier has today (November 25) announced the appointment of a new executive director and chief finance officer as Michael Clarke puts the finishing touches on his new look management team.
Analysts said that Clarke had now “completed his transfer signings” as he battles to stabilise the firm.
Mark Moran, 51, will replace former finance director Jim Smart, who will remain at the firm until early 2012 to ensure a smooth handover.
Before joining the firm, Moran was group finance director of healthcare manufacturer SSL International and brings with him “extensive experience of working with global brands”.
Clarke said: “I am grateful for Jim’s personal support for me during my first months with the company and for his broader contribution over the past few years. I wish him every success in his future career.
“Mark Moran will be a terrific addition to the team. His expertise will be invaluable as we continue our journey to rebuild the company and restore growth. I’m delighted that our new leadership team is now complete."
Since Clarke’s arrival in August, he has wasted no time in bringing in new blood, with the arrival of Graham Hunter and Iwan Williams as managing directors of the newly split grocery and bakery divisions.
