Premier restructures bread supply chain

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Premier Foods is rationalising its bread business with the closure of bakeries at Greenford and Birmingham, and the removal of 130 distribution routes.

This will result in closure of distribution operations in Greenford, Birmingham, Mendlesham and Plymouth.

The company also plans to restructure its outsourced logistics operations to optimise the new network.

Together, these proposals are expected to result in approximately 900 fewer jobs across the Company’s Bread Division. Premier’s bread brands include Hovis.

The changes follow on from the loss of a low-margin bread contract. Premier expects the changes to cost some £28m.

In its first quarter statement issued last month, Premier said: “Following a recent business review, and consistent with its approach to improving sustainable profitability in bread, the company will be unable to renew a bread contract it holds with a retail customer with effect from mid 2013. This contract loss accounts for approximately £75m annual sales, has very low margins, is costly to service and will not affect 2012 performance.”

Looking ahead, Premier chief Michael Clarke said: “By simplifying our cost base, we can increase focus on improving efficiency, quality and service levels to help grow our core Hovis business. We recognise the impact these actions will have for our employees at the sites affected. Decisions will not be taken lightly but they are necessary if we are to build a strong and successful future for the Bread Division and those who remain with our business”.

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