Profits up 25% at food scare firm

PREMIER Foods, the company at the centre of the UK's biggest-ever product recall, saw its profits leap 25% in 2004 and forecast sales will grow in line with its targets this year.

Premier, which floated on the UK stock market last year, reported profits of £107.4m. Sales were up 8.8% at £842.2m.

The figures, based on the year to 31 December, before the Sudan 1 food scare emerged, were slighty better than the City's expectations of £106.1m profit on £838m sales.

'The Sudan 1 issue has been an upheaval for the business in terms of time and effort,' said chief executive Robert Schofield. 'However, in financial terms, based upon our assessment of claims and our insurance position, we believe the company does not have a material financialexposure.'

Shares in Premier Foods dropped 4.7% to 265½p yesterday on fears that the Sudan 1 food scare, which has led to the recall of 420 food products from supermarket shelves, might spread to the US.

The Food Standards Agency has identified 12 European Union nations as having food products contaminated by Premier's Cross & Blackwell Worcester Sauce, which contains Sudan 1, a carcinogenic food dye. The crisis is expected to cost the UK food industry some £100m.

Schofield said the media coverage had not impacted on sales of Premier brands. 'Consumers are telling us they don't necessarily see this as a brand issue and see it more as an industry issue,' he added.

Schofield added that the company had enjoyed a 'tremendously exciting year' following last year's Initial Public Offering and grown profits despite 'challenging market conditions'.

The company also endured a serious fire at its Bury St Edmunds factory in Suffolk, which held back sales of two of its key brands - Branston pickle and Loyd Grossman sauces. The new acquisition of rice pudding firm Ambrosia, however, made an 'excellent contribution' in its first full year of ownership.

The company also said the acquisition of Bird's custard and Angel Delight this year would provide further growth opportunities.

Schofield added: 'Our business is underpinned by strong brands, scale, efficiency and cash generation which will enable us to deliver continuing healthy growth.'

The company declared a final dividend of 9p per share. The stock, which is up nearly 23% since last July's flotation, was up 9p at 273p in early trading.