Premier Foods finance director Paul Thomas has defended the company’s mounting debt levels following its half-yearly trading statement.
Unaudited net debt at the end of June was £1,820m which Premier said reflected the “seasonality of the business, the acceleration of the manufacturing rationalisation programme, lower property proceeds... and the impact of commodity cost and price inflation on our working capital”.
Speaking to the Guardian, Thomas said debt will eventually come down: "We could have managed our debt down by avoiding the restructuring programme but we took the decision, with the board, to proceed with that even to the extent that we have accelerated the closure of a couple of factories from 2009 to 2008.”
Premier expected net debt to fall during the second half of the year as the
rationalisation programme is completed and as trading profit increases. As part of the programme, the company has closed it Thurles, Bristol and Droylsden factories with the remaining four facilities to be shut down by the end of 2008.
Premier also said it is on track to deliver £113m in cost savings promised when it acquired the RHM and Campbell’s businesses although admitted integration costs will rise due to lower property disposal proceeds.
The company also reported a seven per cent increase in group sales for the first half of 2008 and noted that trading profit is in line with the first half of 2007.
Thomas joined Premier Foods as finance director in 2002. Prior to that, he was the FD at Coors Brewers (formerly Bass Brewers).
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