Business

Premier Foods, the maker of Branston pickle and Hovis bread, pointed to major increases in packaging costs today (4 March) as it announced a pre-tax loss of £73.5m for 2007.

Premier, which took on Hovis with its acquisition of RHM during 2007, said packaging and raw materials costs in its grocery business increased by £75m in 2007.

The pre-tax loss of £73.5m compared with a £59m profit in 2006. Total sales from continuing operations soared by 167% to £2.25bn, mainly due to the RHM purchase.

Premier said there had been "no evidence of a slowdown in inflationary pressures" in the first two months of 2008, but it would "continue to mitigate these through cost-reduction programmes and further price increases".

Premier also said it had renegotiated a revision to its banking covenants and agreed additional funding to "increase the financial headroom available".

The acquisition of RHM in 2007 followed Premier's purchase of Campbell's, the soup manufacturer, in 2006.

Premier's share price rose by almost 7% to 98p this morning after it announced the results.