Procurement helps boost Premier profits

16 February 2011

16 February 2011 | Lindsay Clark

Manufacturer Premier Foods has succeeded in increasing its profits against a backdrop of falling sales, in part down to improved procurement performance.

The firm’s financial results, published yesterday, said: “Procurement gains from working more strategically with our suppliers added £16 million to the grocery trading profit.”

The company, which makes well-known brands including Hovis, Mr Kipling and Branston, reported that sales had fallen by 3.5 per cent to £2.57 billion, in the year to December 2010. However, adjusted profit – before tax but after paying off some debt and selling part of the business – had grown by 6.4 per cent to £166 million over the same period.

Chief executive officer Robert Schofield said: “Our business has proved resilient, with branded volume market share growth, increased margin from procurement and manufacturing efficiency and lower operating expenses. There is more to do in each of these areas and we have aligned the organisational structure behind the strategy of growing our brands.”

In November last year, group procurement director Mark Hughes, told SM the company had a target of reducing manufacturing controllable cost by 4 per cent year-on-year, which was jointly supported by procurement and operations teams. This helped cut its supplier base to create a more productive relationship with its top vendors. Speaking then, Hughes said: “We have actually cut our supplier numbers by 11 per cent in the latest quarter, and our top 100 suppliers, which represent 45 per cent of our spend, have experienced real growth of 33 per cent over the past three years.”

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