Hovis owner Premier Foods sees quarterly sales drop

Premier Foods is forming a joint venture for its Hovis brand and will invest more in cakes

The owner of Hovis and Mr Kipling cakes, Premier Foods, has reported a drop of 6.2% in first quarter sales.

Premier Foods, which has a host of well-known brands including Bisto gravy and Loyd Grossman sauces, said the grocery market was subdued.

It said a later Easter and mild weather also meant lower sales this year.

However, Premier, which recently completed a £1.1bn restructuring, said trading conditions would continue to be tough for the rest of the year.

Premier said that it would, however, meet its annual forecasts and planned new product launches and a rise in marketing spending in the second half of the year.

Sales at the group's "support" brands including Homepride and Angel Delight, were down 10.4%.

The sales fall reflects a weak quarter for supermarket food sales. All four major supermarkets saw sales drop in the three months to March as discount chains Aldi and Lidl picked up business.

Premier is in the process of forming a joint venture with US private equity group Gores, which will see its ownership of Hovis fall to 49%.

Premier aims to concentrate more energy on its cake business, which will invest £20m in a new production line at its factory in Barnsley.