Hovis bread maker Premier Foods has slashed its final dividend and revealed extra banking facilities to help it cope with rising debt payments and soaring wheat prices.
Britain’s biggest food maker, which has a debt mountain of £1.6 billion, said it needed to "increase its financial headroom" due to unprecedented food inflation and general economic uncertainty.
Premier, which also makes Mr Kipling cakes, Branston Pickle and Quorn, posted a £73.5 million pre-tax loss for 2007, compared to a profit the year before of £59 million as it integrated recent acquisitions Campbells and RHM.
The group announced its final dividend will be 2.2p, taking the total for 2007 to 6.5p - nearly half 2006’s payout. It has also negotiated an extra £125 million of working capital for this year.
Chief executive Robert Schofield said: "Given the high level of input cost inflation in 2007 and the potential for further inflationary pressures in 2008, we consider that it is prudent to increase the financial headroom available to us to ensure that our investment programmes can proceed to plan."