Premier Foods also proposes to ‘simplify the bread distribution network’ by removing approximately 130 distribution routes, taking into account the reduction in volumes from the previously announced loss of a low margin bread contract by mid 2013.
As a consequence, the company is proposing to close UK distribution operations in Greenford, Birmingham, Mendlesham and Plymouth.
It is also proposed to restructure the company’s outsourced logistics operations to optimise the new network.
“Decisions will not be taken lightly,” said Michael Clarke, CEO of Premier Foods, “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.”
Charges associated with these proposals are expected to be approximately £28m and will be reflected in the company’s 2012 and 2013 financial statements, with the majority of the cash outflows to implement the proposed changes taking place in 2013.
The Company expects to recover the majority of the cash impact of the proposed changes in future periods through realising site disposals, reduced working capital requirements and lower capital expenditure.
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