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Mr Kipling owner Premier Foods in share plunge on profit warning

Shares (Berlin: DI6.BE - news) in Premier Foods (Frankfurt: A1JWNB - news) have dropped 11% after it warned on profits - reporting weak quarterly sales and price pressures from the slump in sterling.

The maker of Mr Kipling cakes and Bisto gravy said it was cutting its full-year trading profit forecast by 10% after third quarter sales came in weaker than expected despite a strong December.

The firm, which had already cut its full-year sales expectations in October, has been raising prices to help account for higher costs - a consequence of the pound's weakness since the EU vote last June.

It has been grappling not only a rise in the cost of core commodities but also the effects of weaker sterling, which makes things like sugar more expensive to buy in pounds.

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It said it was taking longer than expected to agree new supply deals with supermarkets - an issue highlighted by rival Unilever (NYSE: UL - news) 's so-called 'Marmitegate' row with Tesco (Frankfurt: 852647 - news) and others in October.

Group sales in the quarter to 31 December fell 1% to £251.4m while volumes rose by 3.4% - aided by some discounting - though it also reported fewer multi-buy promotions by retailers.

Premier (BSE: 500540.BO - news) said it hoped to offset some of the sales pressure through a three-year cost-saving and efficiency programme which aimed to deliver savings of £10m annually.

It is not alone in reporting tougher trading conditions, with many manufacturers, suppliers and retailers all having to balance the need for profit against shielding customers from rising costs.

Shoppers and businesses are already witnessing higher prices for goods sourced from abroad - with carmakers among those warning of looming increases for UK drivers .

Burberry has been among firms benefiting from sterling's weakness.

Its third quarter trading update showed tourists were continuing to drive an "exceptional" rise in UK sales - up 40% on a like-for-like basis.

It said the pound's slump would add around £115m to full year profits.

However, Premier Foods was joined in warning on profits by the publisher Pearson (Xetra: 858266 - news) , which saw its share price take a 29% hammering when the market opened on Wednesday.

The former owner of the Financial Times, which now largely focuses on its education business, cut its profit guidance for the next two years and said it was considering the sale of its stake in Penguin Random House to help battle "unprecedented" changes hitting its key markets.

It reported poor performance in North America, with net revenues down 30% in its last quarter.