Premier Foods, owners of the Mr Kipling and Paxo brands, have announced plans to cut up to 600 jobs. This comes as the company announced “financial difficulties” and the need to save £40 million by next year.
The company, which is currently struggling under an £850 million debt mountain, has already been given extra time by its bank to sort out its finances and make a realistic plan for repayments. A “covenant test”, which is a technique used by lenders to keep track of the company’s financial health, was scheduled for 31st December, but was moved to 31st March to allow Premier time to organise its debts.
Therefore, the company has decided that downsizing its workforce makes the most sense economically, especially following the disposal of its Quorn brand and the company’s canning factory.
In an attempt to combat the lack of consumer interest, Premier Foods will also be allocating funds for the growth of its eight key brands, which include Ambrosia, Batchelors, Oxo and Bisto. The decision was made to double marketing spending on its best selling brands, starting with television advert campaigns for both Sharwood’s and Lloyd Grossman later this month.
The economic strategy also includes plans to sell off non-core businesses, with Hartley’s jams and Haywards pickles brands already taken over by other companies.
The St Albans based company currently employs around 12,000 people in the UK and Ireland, meaning that the proposed cuts, which are subject to a consultation process, would make five per cent of its workforce redundant.
Chief Executive, Michael Clark, who recently joined the company from American consumer giants Kraft, said: “Discussions with the company’s banks over a re-financing package continue to make progress and it is anticipated that an appropriate agreement will be reached soon.”
“While decisions to reduce the workforce are always difficult, I am convinced we are taking the right steps in the long-term interests of the businesses,” Mr Clark added.
