Trading Update

Premier Foods plc
09 July 2007


9 July 2007


Premier Foods plc ('Premier')

Trading update for the six months to 30 June 2007


Integration of Campbell's completed and integration of RHM proceeding to plan.
Confident that we will meet our expectations for the full year.


Premier, the UK's leading food producer, is providing the following update for
the 6 months ended 30 June 2007.


• Integration of Campbell's completed

• Integration of RHM on track

• Combined annual cost synergies of £113m confirmed

• Strong trading in May and June offsetting the effects of the hot April weather

• Campbell's sales returned to growth

• RHM post acquisition trading in line with expectations

• Bread Bakeries impacted by higher wheat prices and competitor activity

• Strong plans for the second half across the Group


Robert Schofield, Premier's Chief Executive, said:


'The first half of 2007 will be seen as a step-change for Premier Foods.  We
completed the integration of Campbell's, a business one third of our size, in
April, just 8 months after the acquisition and we have already made significant
strides on the integration of RHM.  We have confirmed the total annual synergies
from both these acquisitions at £113m and remain on track to deliver the
combined £17m of synergies targeted for 2007.  Through this, underlying business
performance has remained steady and whilst cost pressures, particularly wheat,
are an issue, we expect to see branded growth across our business in the second
half of the year and we remain confident that performance for the full year will
meet our expectations for the Group as a whole.'


Group summary


In the first half of 2007, we have continued to transform our business at pace.
We have completed the integration of Campbell's into our infrastructure, closing
the Cambourne office in April.  Since the completion of the acquisition of RHM
in March, we have already closed the RHM head office, completed our
manufacturing review and commenced the integration of the Culinary Brands
division.  We have also confirmed the annual level of cost synergies at £85m, in
addition to the £28m we are on track to deliver from the Campbell's acquisition.


Reported sales for the Group for the first half of 2007 will be significantly
higher than the same period in 2006 due to the acquisitions of Campbell's and
RHM.  We anticipate that like-for-like sales (ie excluding acquisitions and
disposals made in 2006 and 2007) will be slightly behind last year as a result
of the exit from a number of low margin own label contracts and a high level of
promotional activity behind our branded beans in the first half of 2006.  The
business was particularly impacted by the hot weather in April but the return to
a more 'normal' British summer has improved performance and we expect to see
branded growth across all our ambient business in the second half as our plans
for Campbell's and RHM take effect.


We are delighted by the performance of the Campbell's business where we have
arrested the 4% decline in sales seen at the time of acquisition and have moved
the business into growth.  As previously indicated, the profitability of the
Campbell's business in the year prior to its acquisition was inflated through a
significant reduction in marketing spend.  We have returned investment in the
business to more normal levels and, as a consequence, trading profit for the
first 6 months of 2007 will be below that for the comparable period in 2006.


As previously indicated, trading profit for RHM for the period from January
through to acquisition was particularly impacted by higher wheat costs and
softer trading in the Culinary Brands division. Trading for RHM following its
acquisition has been in line with our expectations and although the Bread
Bakeries division continues to be impacted by further increases in wheat prices
and promotional activity by competitors, the Culinary Brands, Cakes and Customer
Partnerships divisions have all traded well since the warm weather in April.  We
anticipate that we will need to recover the further increases in wheat prices we
have seen since February through pricing in the coming weeks.


As part of our ongoing review of the Group's activities, we have decided to
dispose of the RHM frozen foods business. This business manufactures primarily
retailer label products in the frozen pies, ready meals and desserts categories
and is part of the Customer Partnerships division.


The major part of our branded launch activity for 2007 falls in the second half
of the year with the launch of Batchelor's into wet soup, the launch of Oxo into
liquid stocks, new seeded varieties of Hovis and further Loyd Grossman range
extensions.  Although growth of our Meat-free business was limited in the first
half of 2007 as we put promotional activity on hold whilst we commissioned our
new factory in Methwold, we are now back on promotion and anticipate that sales
growth will return to former levels.


Convenience Foods, Pickles, Sauces and Meat-free

Sales for this product group are anticipated to be significantly ahead of the
same period in 2006 due to the acquisition of Campbell's.


Like-for-like sales (excluding Campbell's) are anticipated to be slightly behind
sales in the first half of 2006 of £225m.  The reduction is due to a combination
of lower sales of branded beans compared to the heavily promoted launch period
last year and lower sales of own label convenience foods. The underlying market
share performance of Branston beans remains stable and we are pleased by the
continued strong growth of Branston pickles and relishes and Loyd Grossman
cooking sauces.  In addition, we have recently won a number of own label
convenience foods contracts, which will have a positive impact on sales in the
second half of 2007.


We significantly reduced promotional activity behind Quorn and Cauldron whilst
we transferred production to our new facility at Methwold, which temporarily
limited the growth of our Meat-free business during the period. We have incurred
additional costs on this transfer but we anticipate that the investment will
provide us with additional opportunities when the new capacity is fully
commissioned. To facilitate further growth we have also commenced the
construction of an additional fermentation unit at our Belasis factory at a cost
of approximately £35m over the next 2 years to support the further significant
growth that we anticipate from Quorn.


We are delighted by the performance of the Campbell's business where we have
arrested the 4% decline in sales seen at the time of acquisition and have moved
the business into growth.


Spreads, Desserts & Beverages

Reported sales for this product group are anticipated to be lower than sales of
£141m for the first half of 2006 primarily due to the end of the Cadbury
chocolate beverages licence in May 2006 and the exit from a number of low margin
own label spreads contracts.  We are pleased by the continued progress of
Hartley's jellies, and our branded spreads and desserts businesses remain on
track.


Bread Bakeries

In line with our expectations at the time of acquisition, sales and trading
profit for the period since acquisition are anticipated to be lower than the
comparable period in 2006 due to the competitor promotional activity being only
partly offset by price increases.  On a pro forma basis, sales for the 6 months
to 30 June 2007 are anticipated to be in line with the comparable period in 2006
as the price increases over this period are expected to offset substantially the
competitor promotional activity.  Pro forma trading profit for the 6 months to
June 2007 will be lower than the same period in 2006 due to further increases in
wheat prices through the spring and the impact of the competitor promotional
activity.  We anticipate that we will need to recover the increased wheat costs
through pricing in the coming weeks.  We have planned significant activity
behind Hovis during the second half of the year with TV advertising behind our
market-leading 'Best of Both' bread and the launch of a new seeded Hovis loaf.


Cakes

Sales for the Cakes division since acquisition and for the 6 months to 30 June
2007 are expected to be ahead of the comparable periods in 2006 with a
particularly strong performance by Mr Kipling. Following a review of the van
sales operation in the Cakes division, we have concluded to exit this channel
due to the high costs in servicing customers through this route to market.  This
will be completed during the second half of the year and will consequently
reduce sales growth.  The resultant cost savings are expected to more than
offset the lost contribution from these sales.


Customer Partnerships

Sales for the Customer Partnerships division since acquisition and for the 6
months to 30 June 2007 are expected to be broadly in line with the comparable
periods in 2006 due to strong growth by our chilled business being offset by a
poor performance by the frozen foods division, which, as indicated above, we
have decided to sell.


Culinary Brands

Sales for the Culinary Brands division since acquisition and for the 6 months to
30 June 2007 are expected to be behind the comparable periods in 2006 as a
result of softer trading in the first 4 months of the year. We are pleased by
the recovery of the Culinary Brands division following the return to cooler
weather in May and June.


Finance costs

The recent interest rate rises have increased our anticipated interest charge
for the year.  We have derivative instruments in place which effectively fix the
interest rate on £700m of our debt and cap the interest rate on a further £700m
at a LIBOR rate of approximately 6.2%. As a result our exposure to further
interest rate rises is limited on this capped element of our debt.


RHM integration

The integration of RHM is continuing to plan with the closure of the RHM head
office located in Marlow at the end of June and we remain confident on achieving
£85m of annual cost synergies from the combination of Premier and RHM.  We
announced last week the start of consultations with staff on proposals to close
6 manufacturing sites, consolidating production into 5 sites to support our
growth plans whilst maintaining our continuing drive for enhanced manufacturing
efficiency.


In addition, we have announced the closure of the Culinary Brands head office in
Addlestone and have announced proposals to close the Middlewich administration
centre.  We have completed our review of the Cakes business and have announced
proposals to close the Cakes head office in Windsor in the first half of 2008
and integrate the Manor Bakeries business into Premier's operations in St
Albans.  We have decided to integrate the Avana Cakes business into the RF
Brookes business due to their common supply chain and customer base.  We have
also announced new Group-wide structures for the procurement and technical
functions.


Interim results for the six months ended 30 June 2007 will be announced on 4
September 2007.


Comparative segmental analysis for the first and second halves of 2006, restated
to reflect the acquisitions of Campbell's and RHM have been placed on our
website at:

http://www.premierfoods.co.uk/premierfoodsmain/investor-relations/
financial-information-resource-centre/presentations/presentations_home.cfm


Enquiries:

Premier Foods plc                         Tel:     [phone]

Paul Thomas, Finance Director

Gwyn Tyley, Director of Investor Relations


Citigate Dewe Rogerson                    Tel:     [phone]

Michael Berkeley

Justin Griffiths

Nicola Smith


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