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Hovis Owner Premier Foods To Cut 900 Jobs

(c) Sky News 2012

The owner of Hovis has announced plans to cut 900 jobs in its struggling bread business as profits become harder to come by.

In a statement, Premier Foods (Xetra: A0B7GL - news) said it was to close two bakeries and reform its delivery network.

The biggest impact will be felt in Birmingham, where 511 jobs are to be lost with the closure of a factory and distribution operation.

Hovis operations at Greenford in west London will also shut costing 196 jobs while Premier (BSE: PREMIER.BO - news) said it was also preparing to close distribution sites at Plymouth and Mendlesham in Suffolk resulting in 95 job cuts.

The closures are subject to consultation with employees but are scheduled to take place during the course of 2013.

St Albans-based Premier, which also makes Mr Kipling cakes and Bisto gravy, has seen its Hovis division hit by intense competition in the bread market and a surge in wheat price inflation caused by poor weather.

As a result it is set to lose a £75m-a-year contract with a major grocery chain from the middle of next year after Premier was unable to agree a new deal on sufficiently attractive terms.

It is cutting 130 distribution routes and closing the supply centres to take into account the expected reduction in volumes.

Premier chief executive Michael Clarke said: "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."

Sky's City Editor Mark Kleinman revealed last month how the business had recruited Goldman Sachs (NYSE: GS - news) to find a buyer for Hovis.

Premier has offloaded several well-known brands in recent times, including Sun-Pat Peanut Butter and Branston Pickle, as it looks to concentrate on a portfolio of what it sees as core brands.

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