Does anyone know this company? It was highlighted in this weekend's paper and I wonder if it is about to fall a lot more ( eg with the prospect of a Rights Issue, etc), and that might be a good time to get in - when they have some cash.

Are they beholden to Supermarkets, I wonder - could this mean they have little "pricing-power"? - That's something that any go-go business needs, perhaps along with a USP - although this is hardly likley in the "food" industry, is it?

Shameful. I've long argued on PFD threads and elsewhere that its business model is doomed anyway - this disgraceful demand for protection money, blackmail payments, slush money, bribes, demanding money with menaces, or whatever you want to call it, to keep the company afloat only confirms they ain't going to survive by normal means.

Hormel might wish to distance themselves from any expression of ongoing interest, for a while (though if they seriously want Premier, they might not mind a bit of damage to the share price).


"At Hormel Foods, our top priority is maintaining the highest ethical standards throughout all levels and locations of the company."

"In the current challenging environment, the support of all of our suppliers is crucial."

"Newsnight understands many suppliers have paid a total in the low millions so far."


How is this shown in the company's accounts? What is it lumped in with? And what does that area of the accounts look like without this sneaky boost?

i'm amazed their sp has fallen only 7% today .... what a bunch of blatant crooks

Blackmail, surely not once it's out in the Open. But n'less it stinks and whilst in ( Other businesses / other circumstances)... similar payments may be requested, it's very difficult for any supplier to resist....concluding that they can put a penny here-n-there on Sales - But rarely do!
One suspect this Co is on a slippery slope, as Markets twist and turn - any thoughts?

EDIT- cynic - that's a good comparison . . . makes I think.
One might suspect that as an existing supplier, any suggestion of bribery would not hold - and as such, surely the opposite will be true too. . So, I suspect ( but cannot know ) that whilst this all smells bad, it may not be illegal ( therefore the law will need change, will clinch their position ). However, looking behind the Demand is the need for the Co. to survive and just maybe this was the only way they could fund new developments - as far as investors are concerned this might the last-chance saloon . . . . but then what do I know?

what is the difference between this sort of blackmail - you can dress it up as other if you so choose - and bribery if the boot was on the other foot?

Premier Foods in mafia-style extortion shakedown?

December 6, 2014, 4:10 AM CST | Written by Christian Nordqvist | Economics / FinanceNews

After being caught allegedly shaking down its suppliers for investment money, otherwise they would be ‘de-listed’, Premier Foods plc, the maker of Ambrosia, Mr Kipling Cakes, Loyd Grossman, Sharwood’s, Oxo, Bisto, and Batchelors, has seen its share value slide.
Vince Cable, Secretary of State for Business, Innovation and Skills has filed a complaint to competition authorities about the heavily-indebted, St. Albans-based British food manufacturer.

Mr. Cable was shocked at Premier Foods’ behavior after hearing it had sent letters to its suppliers asking for investment money as a pre-condition to remaining on its suppliers list. If anybody wants a clear definition of “extortion”, this must surely be it.

News about the shakedown letter from Premier Foods to its suppliers was revealed in a BBC Newsight TV show. Suppliers described the practice simply as “blackmail”.

According to Newsnight, suppliers have handed over millions of pounds in “investments” in this way.

Definition of Extortion: the practice of obtaining something, especially money, through force or threats. Synonyms: blackmail or shakedown.

According to Premier Foods, the practice is not in breach of any competition rules. However, the Government expressed deep concern about the report.

The BBC, which has seen a letter sent by CEO Gavin Darby on November 18 to suppliers, said:

“We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas. We will now require you to make an investment payment to support our growth.”

“I understand that this approach may lead to some questions. However, it is important that we take the right steps now to support our future growth.”

When one of the recipients of the letter inquired by email about the requested annual payments, a Premier Foods executive replied:

“We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list.”

Bob Horsley, who has been a supplier to Ambrosia in Devon for over a decade told Newsnight he thought it was like blackmail. “What they are saying is, ‘Unless you pay this money, you can’t do the work.’”

Mr. Horsley, who opted not to pay up and risks being de-listed said:

“I’m just a layman, but I can’t see how that is right.”

Strong-arm bullying for money not uncommon

This kind of supplier-shakedown is not uncommon in British business, apparently. According to the BBC, major UK retailers including John Lewis, Argos, Debenhams and Halfords have sent similar letters.

In a letter to the Competition and Markets Authority, Mr. Cable wrote:
“I am very concerned that this practice is becoming commonplace and is placing considerable strain on already hard-pressed small businesses. I am writing to you, therefore, to request that the Competition and Markets Authority considers the available evidence of these so-called “pay-to-stay” clauses employed by, amongst others, Premier Foods.”

“I appreciate that you can only act if there is sufficient evidence that this issue meets your prioritisation principles.”

Director-General of the Institute of Directors Simon Walker said such practices, at a time when “public faith in business is painfully low,” are simply unacceptable. He added that it “. . . puts a bullet in the chamber for those who think the heavy-hand of regulation is the only way to change the culture of corporate Britain.”

Mr. Walker added that lawmakers are right to be concerned. He is worried that some “bad apples” trigger state intervention in UK business, which will be hit by a flood of new regulations.

“Holding small businesses and suppliers at gun-point is a sure way to catch the attention of policymakers and regulators. Premier need to consider their arrangements closely. We encourage them to think of the long-term damage they could be doing to their suppliers, their brands, and business in general,” Mr. Walker said.


source link (article includes tv footage video, for those who missed it)

That scale on the left goes to 4000p not 400p. Shares have fallen 99% from their peak. Receivership next? Debt level is between 3x and 7x market cap! (Depending whose stats you believe)

Premier already sold off the Branston brand to a japanese buyer. If the company goes bust, I imagine their demise will be preceeded by a selloff of one or two other famous brands in a desperate attempt to stay in business. The US company purportedly interested in PFD has a strong ethical statement in its own intro, and presumably will not want the bad aspects of PFD and its damaged reputation, but might selectively salvage a few brands instead?

"..Mitie was revealed to have demanded one-off payments of £10,000 to become a preferred supplier. It refunded the money when the scandal was revealed..."

(The Independent)

Could PFD find themselves having to refund millions?

“Over the last few days it has become apparent that this mechanism has been widely misunderstood and misinterpreted," (Latest company statement)

Errm.. no it hasn't. It's been very well understood and interpreted. Yooz bin rumbled.


The company has reportedly collected £millions via this disgraceful tactic. If the furore leads to less cash coming in via bribes, they are in even deeper financial trouble now. Their debts are already massive - several times their market cap. I expect another profit warning, on top of the ones issued in June and 6 weeks ago.

When their debt structure was rejigged in March, it was tied to a supposed rebirth of the company's prospects. Yet a few days later the share price went into reverse and has fallen by two-thirds since, with two profit warnings along the way.

Not just individual suppliers of food who were bullied by Premier. Marketing agencies that worked with Premier Foods are now attacking the company:

"..Agencies that work with Premier Foods are being urged to contact the Marketing Agencies Association's Pitch Watchdog anonymously to flag concerns over controversial 'pay to stay' payments, as it calls on government to take action.
The MAA has urged agencies to come forward to raise concerns over the practice..."

"...MAA MD Scott Knox accused the business of using agency payments as "credit" to fund the business.."

".. Another agency said last year it was asked to make payments and that it was "effectively" asked to work for nothing. The agency claimed after it refused to make payments to Premier, which he described as an "aggressive procurement led business", it found itself the victim of even tougher price negotiations. Labelling it "malpractice", one agency said tightening the screw on the agency supplier base "destroyed" reputational trust and risked long term relationships. Other business should not be forced to foot the bill for management mistakes, he said..."


http://www.marketingmagazine.co.uk/article/1325559/agencies-urged-raise-concerns-premier-foods-investment-payment-scheme?HAYILC=RELATED

And now, a question mark over the quality of the famous name foods that it sells:

Maggots reportedly found in Oxo cubes:

https://metro.co.uk/2014/12/08/couple-find-live-maggots-inside-oxo-cubes-seconds-before-putting-it-in-dinner-4978656/

I hope they weren't the vegetable ones!

Beware Food Zombie

Comprehensive assessment of PFD

Trading Statement

Quarter 4 Management Statement

Improving sales trend through key trading period

Premier Foods today presents a management statement for the quarter to 31 December 2014 and summary results for the twelve months to 31 December 2014. As previously advised, the Company is changing its year-end to early April, so the next audited financial statements will be prepared to the fifteen months ended 4 April 2015. All disclosures in this statement are unaudited and the term 'year' refers to the twelve months to 31 December 2014.

· Power Brands sales down (3.5%) in quarter 4, with improving trend in December
· Highest quarterly market share for three years; highest December market share for four years
· Positive results from areas where we are investing
· Mr. Kipling delivered increased sales and share gains, with accelerating December trend
· Trading profit for the year of £131.0m, in line with expectations
· Adjusted PBT for the year of £77.1m and adjusted earnings per share of 8.6p
· Net debt at 31 December 2014 of £567.6m, in line with expectations

Some of the company's words are rosy, some of their numbers are not. The numbers matter more.

"..The Company's underlying sales declined by (4.6%) in the fourth quarter of the year, with Power Brand sales down (3.5%) and Branded sales (3.4%) lower. Non-branded sales declined (11.5%)..."

(Yes I know I am being selective!) Will today's initial surge be sustained?

PS: Claire Harrison-Church, currently Category Business Unit Director at Premier Foods, and described on her arrival in as having "a wealth of experience across the retail industry and marketing, having led marketing teams at KFC, Boots, and Unilever." is leaving. Headhunted by Asda.

A decent run lately.

I have a small holding, no plans to sell.

Time to buy?
After McCormick has walked away (RNS April-2016 - DYOR )...does anyone think this is a time to invest, with current sp is 39p...
.....it was £2 in late 2007, but that was before Lidl/Aldi knocked UK Supermarket's high volume position . . . and now Supermarkets are able to dictate to suppliers, like Premier, their pricing policy. Esp.as folks now don't have "Brand Loyalty" - IMHO.
+With labour / transport costs likely to rise, where does that leave PFD ?

Credit Suisse note today:
"■ A very disappointing Q3 and outlook statement sees Premier Foods warn that profits are set to be 10% below consensus. We lower our estimates accordingly and price target to 43p
■ Q3 sales were down 1% rather than the modest increase that had been expected post H1, with Q3 volumes up 3.4% but price/mix -4.4%. No full year sales guidance is now offered (at H1 the group was expecting +2-4% in H2) , but the group expects the immediate trading backdrop to remain challenging.
■ The group highlights in Grocery a shift in promotional trends in the trade away from multi-packs putting corresponding pressure on volumes - to offset this price promotions were put in place but this has had a marked impact on profits. In Cakes Kipling has lost ground to own label. In general, market shares haven't fallen, the group sees this as market not market share driven
All this is taking place against a backdrop of significant input cost pressure which is beginning to feed into the P&L. The group is mitigating where it can but along with many in the UK is seeking price increases (of mid single digits we assume). In the current climate some lag in gaining these increases is inevitable.
■ Expected year end debt of £525m is not much different to the £521m we had. The group has identified a further £10m of cost savings for 2017/18 and the same again in the new year, largely it seems from merging the supply chains of the two divisions.
■ It is very disappointing to report this continued decline in sales despite all the efforts of the company. £10m cost savings in each of the next 2 years may help protect profits to some degree, but is set against the on-coming input cost inflation. The investment case needs sales growth and that continues to prove elusive."

I just spotted this thread. I was considering this share, but it seems PFD have not sorted out their problems.

I held this share a long time ago, but "cut my losses" when it was revealed that they had to supply food to the supermarkets "under cost" - which is a bad business model.

It is a shame that after all this time they are unable to change the model and I find a realistic way forward to turn things around faster.