Trading Update

Premier Foods plc
10 January 2008

Premier Foods plc ('Premier')


Trading update for the year ended 31 December 2007



Premier, the UK's leading supplier of grocery products, is providing the
following trading update for the year ended 31 December 2007.



Highlights

•        Second half pro forma sales1 up 3%

•        Full year pro forma sales up 1.4%

•        Bread price rises achieved to offset wheat price inflation and shelf
         price differentials restored in mid-December

•        Transformation of the business continues apace: integration and
         synergies continue being delivered to plan


Pro forma sales
       Full year
            Group                                                         +1.4%
       Second half
            Group                                                          +3%
            Core Premier2                                                   0%
                   Branded                                                 +3%
                   Retailer brand                                          -8%
            Culinary Brands                                                +2%
            Cakes                                                          +7%
            Customer Partnerships                                          +4%
            Bread Bakeries                                                 +6%



We expect total reported sales for continuing operations for the year to be up
by approximately 165% reflecting the acquisitions of Campbell's in August 2006
and RHM in March 2007.  Pro forma sales growth over the second half of the year
was approximately 3% resulting in pro forma sales growth for the year of
approximately 1.4%. Christmas trading was satisfactory across the Group with the
Cakes and Customer Partnerships businesses performing well, offset by a
disappointing result from the core Premier business, where although branded
sales grew by approximately 3% in the second half retailer branded sales
declined by 8%.



As we have previously indicated, we have experienced significant cost pressures
across the business this year, particularly wheat.  Despite these cost pressures
and reduced branded bread volumes we anticipate full year Trading Profit will
still be within the range of market expectations.



Robert Schofield, Premier Foods plc CEO, said:



'After a slow first half, we have seen sales growth improve during the second
half, although this has been held back by the decline in retailer branded sales
in the core Premier business.  We mentioned earlier in the year that we foresaw
considerable raw material and packaging inflation led by wheat but also
affecting dairy, fruits and vegetables in particular.  Whilst these additional
costs have had an impact in the second half of 2007 we have now recovered a
large proportion of these cost increases through pricing and cost savings, which
should provide a solid platform for the development of the business in 2008.



'We are delighted by the progress we have made in the transformation of Premier
in 2007.  The integration of the Campbell's business was completed in March 2007
and the integration of the RHM Culinary Brands division was completed in October
2007.  We have also made significant progress on the manufacturing
rationalisation plan with the closure of two factories in 2007 and seven more
planned for 2008/9.'



Premier Foods, Campbell's and Culinary Brands

The integration of the Campbell's and Culinary Brands businesses into the core
Premier business has proceeded smoothly with the combined business under a
single management structure since August.  Overall, pro forma sales during the
second half of the year for Premier Foods, Campbell's and Culinary Brands
combined were in line with the second half of 2006. Within this branded sales
were approximately 3% ahead of 2006 and retailer branded sales were down
approximately 8%.



Cakes

The Cakes business has continued to make good progress with sales for the year
to 31 December 2007 approximately 7% ahead of 2006.  The integration of the
division into the core Premier business has now commenced with the transfer of
the Cakes head office to St Albans.



Customer Partnerships

The Customer Partnerships business has seen continued strong sales growth with
sales for the year to 31 December 2007 approximately 6% ahead of 2006.  We
completed the disposal of the loss-making RHM Frozen Foods business in the
second half.



Bread Bakeries

The bread category has seen unprecedented change in 2007 with the price of
milling wheat more than doubling and a brand relaunch by one of our major
competitors. We recovered the increase in the cost of wheat through price
increases at the start of September and end of October. We finally saw similar
increases in the retail prices for all our major competitors in early December.
Consequently, we experienced lower branded bread volumes whilst the material
differential in on-shelf prices persisted, which led to a significant reduction
in profitability.  Sales value in the second half of 2007, however, was
approximately 6% ahead of the same period in 2006 due to the increased prices
partly offset by the reduced branded bread volumes.



Financial matters

We anticipate our underlying interest charge will be approximately £110m,
comprising £106m of cash interest costs and £4m of amortisation of debt issuance
costs. This charge reflects a higher average level of debt through the latter
part of the year reflecting the phasing of capital expenditure and restructuring
costs coupled with the effect of recent higher short-term interest rates.



We have recently concluded a debtors securitisation which, combined with asset
disposals, has realised cash proceeds of approximately £100m.



Subject to the finalisation of asset impairments associated with the closure of
sites as part of our integration programme, exceptional costs are expected to be
in the range of £120-£130m for 2007.  Full provision has been taken for all
closures announced to date, although the cash costs will not be incurred until
later this year.  The total cash costs of the RHM and Campbell's integrations
remain in line with our plans.



2008 Outlook

We expect the market to remain highly competitive in 2008 with input cost
inflation continuing to be a factor.  However, we believe our extensive
portfolio of good value food and great brands will stand us in good stead.



A conference call will be held for analysts and investors today at 8:30am.



Conference call details:

Telephone number                            [phone]



Preliminary results for the year ended 31 December 2007 are scheduled to be
announced on 4 March 2008.  We will host a presentation to analysts at 9am at
ABN AMRO, 250 Bishopsgate, London, EC2M 4AA.



1. Pro forma sales represents sales as if all acquisitions and disposals made
since 1 January 2006 had been made on that date and adjusts the Cadbury hot
beverages licence which ended in May 2006.  All figures are unaudited and
provisional.



2. Core Premier comprises the continuing operations of Premier Foods prior to
the acquisition of RHM and therefore includes the Campbell's business acquired
in August 2006.



Enquiries:

Paul Thomas, Finance Director
Gwyn Tyley, Director of Investor Relations
Richard Godden, Investor Relations Manager
Premier Foods plc                         Tel:     [phone]

Michael Berkeley
Angharad Couch
Nicola Smith
Citigate Dewe Rogerson             Tel:      [phone]





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