Premier Foods
plans to sell more non-core businesses and cut its workforce as part of its push to cut costs in the face of weak consumer demand which has hit trading.

Britain's biggest foods group, which is struggling with hefty debts after an acquisition spree and tough economic conditions, said it was taking the action as it now expects results for 2011 to be at the lower end of market expectations.

Every aspect of the company's costs is being reviewed and it is expected that a series of cost saving programmes will be initiated throughout the year that will result in reductions in the workforce, mainly from overhead functions, it said.

Premier Foods said the job cuts would amount to about 5 percent of its current workforce of about 12,0000 employees, adding that it now expects to more than double its original cost reduction target to over 40 million pounds by 2013.

Earlier this month, Reuters reported its plans to sell its Hartley's jams and Haywards pickles businesses to help meet its borrowing rules and secure its survival.

New Chief Executive Michael Clarke is focusing the group on eight of its biggest brands while selling off other businesses as it aims to meet an already deferred covenant test from its banks by end-March 2012.

Discussions with the company's banks over a re-financing package continue to make progress and it is anticipated that an appropriate agreement will be reached soon, Premier Foods said on Tuesday.

The company added that it expects overall financial results for 2011, both reported and underlying, to be at the lower end of current market expectations.

Shares in the company closed at 5.74 pence on Monday, valuing the business at 138 million pounds.

(Reporting by Adveith Nair)