Britain's biggest food group Premier Foods
plans to slash 600 jobs in the UK in the face of weak consumer demand and expects 2011 profits at the lower end of the market forecasts that were already reduced back in October.

The group, which owns a host of top food brands such as Hovis, Mr Kipling and Batchelors, added on Tuesday that trading over its key Christmas period was in line with its expectations.

The job cuts amount to an acceleration of an existing cost cutting plan, and follow a profit warning by the company in October.

They will be made from Premier's 12,000 workforce across head office, support sites and production plants, and will double its cost-cutting target to over 40 million pounds by 2013 from its original plan for 20 million pounds.

The company, struggling with hefty debts after a buying spree and tough trading conditions, said talks with its banks over a re-financing package are continuing and an agreement is expected soon while it looks to sell more non-core businesses.

Analysts focused on the deeper cost cuts and refinancing talks rather than 2011 trading, and its depressed shares, which had risen as high as 288 pence some five years ago, rose 13.2 percent to 6.5 pence by 09:15 a.m. BT.

The group is making the right noises but has a long way to go to tempt shareholders back. Details of the re-financing will be crucial, said analyst Charlie Mills at brokerage Credit Suisse.

The group said trading profit for 2011 will now come in at the lower end of market expectations which were 170-197 million pounds, and most analysts were moving to cut their forecasts.

New Chief Executive Michael Clarke, who joined in the summer from Kraft Foods, is focusing the group on eight of its biggest brands: Hovis, Ambrosia, Mr Kipling, Sharwood's, Loyd Grossman, Bisto, Oxo and Batchelors, while it has sold off other non-core businesses to cut debt.

Earlier this month, Reuters reported it plans to sell its Hartley's jams and Haywards pickles businesses to cut debt further and help meet its borrowing rules.

The group added it will doubling consumer marketing to over 40 million pounds in 2012 from around 20 million in 2011 as six of its eight key brands will be back on TV advertising in this quarter and the remaining two to follow soon.

While arguably jam tomorrow, the jam feels reasonably sweet to us...but we continue to think the share price will be driven by the terms of any prospective refinancing rather than retrospective trading, said analyst Martin Deboo at brokers Investec Securities.

(Reporting by Adveith Nair and David Jones; Editing by Andrew Callus)