Premier Foods profit warning and cost cuts hit shares

Premier Foods announced a profit warning and a cost-cutting programme on Wednesday as the food group battles sluggish sales and increased commodity prices as a result of sterling's sharp fall since last June. Premier said it now expected pre-tax profit for the full financial year to be 10 per cent lower than previous expectations, after sales in the third quarter came in weaker than expected. Shares in the group opened down 15.6 per cent at 42p after the news. As a result of the warning, Premier said it was beginning a cost-cutting programme aimed at making £10m in savings from the beginning of its next financial year. Sales of Premier's branded goods, such as Batchelors soups and Bisto gravy, fell 3.8 per cent year on year, although sales of unbranded products rose 11.6 per cent, suggesting consumers were becoming more cost-conscious.

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