Business

Premier Foods, the manufacturer of Branston Pickle and Hovis bread, will roll out new packaging as part of its rejuvenation of the whole of the Hovis range in the second half of the year.

Sales in the food company's baking and milling divisions increased by 16% year-on-year in the first half, mainly driven by the passing on of higher wheat and other input costs. Sales volumes for Hovis have stabilised, but at a lower level than a year ago.

The firm spent £15m in the first half on the new recipe and packaging for the Hovis white loaf and will extend this to the rest of the range during the second half.

Premier Foods chief executive Robert Schofield said the company had made "good strategic and operational progress" during the first half, despite the difficult economic and trading environment.

Premier has accelerated its plant closure programme, with five shut already and another four due to close by the end of the year.

The closures, brought about by the acquisition of the RHM and Campbell's businesses last year and in 2006, will deliver savings of £113m, although net costs are expected to increase owing to the slowdown in the property market, which has led to a postponement of some disposals.

The passing on of higher commodity costs accounted for a 7% rise in turnover in the six months to the end of June.

Sales for the chilled and Ireland division were around 2% higher, with a stronger performance by the Quorn brand, offset in part by softer sales in the firm's retailer own label chilled business.

While Premier Foods expects trading profit for the first half of the year to be in line with the same period last year, Schofield warned that increased metal costs would feed through to the prices of tinned goods.

The company will announce its interim results for the half-year to 28 June 2008 on 28 August.

Premier's share price rose by 25p to 76.25p this morning.