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Premier foods to start stockpiling ahead of Brexit

By Holly Williams, Press Association Deputy City Editor

Mr Kipling cakes firm Premier Foods has revealed it is to start stockpiling ingredients ahead of Brexit amid fears of gridlock at ports if the UK crashes out without a deal.

The group, also behind well-known brands including Bisto and Oxo, said it was "shortly" to begin building up stocks of raw materials "in the absence of certainty over the arrangements for the UK's departure from the EU".

It said this could lead to a working capital hit of around £10 million over the next few months.

The group said: "Like all businesses, for several months, Premier Foods have been planning on a range of scenarios subject to the nature of any Brexit deal that is reached.

"In the absence of certainty for the UK's departure from the EU, Premier Foods shortly intend to begin the process of building stocks of raw materials to protect the company against a risk of delays at ports."

It stressed the move was "purely precautionary".

The revelation came as Premier Foods also announced that under-fire boss Gavin Darby will leave in January and said it plans to sell off its Ambrosia brand as it looks to appease disgruntled shareholders.

Mr Darby will step down on January 31 after six years in the role, which follows a public row with activist investor Oasis Management and comes just months after he narrowly survived a shareholder rebellion against his re-election.

Premier said it was in talks with third parties over the possible sale of Ambrosia and its factory in Lifton, Devon, as it looks to boost its performance and slash its £500 million debt pile.

Mr Darby said: "The board has determined that it should focus resources on areas of the business which have the best potential for growth through accelerated investment in consumer marketing and high return capital projects.

"Accordingly, we are pursuing options to fund these plans as well as delivering a meaningful reduction in net debt, through discussions with third parties regarding the potential disposal of our Ambrosia brand."

He added: "Having today announced a new strategic initiative for the business, I have decided to step down as chief executive on January 31 2019, which will mark the sixth anniversary of my joining Premier Foods."

Premier is now starting the hunt for his successor.

At Premier's annual general meeting in July, 41% of investors voted against Mr Darby's re-election.

Oasis had called for his departure, claiming he had presided over value destruction and having been critical of his strategy in the past when he oversaw the successful defence of a takeover tilt from US firm McCormick in 2016.

There was also investor discontent over Premier's recent decision not to sell its fast-growing Batchelors brand.

The potential sale of Ambrosia is seen as an olive branch, with the division being the group's third biggest brand.

Ambrosia, which is famous for its Devon Custard and Rice Pudding, was 100 years old last year and has been produced in Devon since the factory opened in 1958.

Premier's half-year results also announced on Tuesday showed pre-tax losses widened to £2.2 million in the six months to September 29.

On an underlying basis, pre-tax profits rose 14.3% to £30.2 million.

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