PREMIER FOODS PLC

Premier Foods Plc

Premier Foods Plc

Part 1

Introduction

Premier Foods plc is a British-based food manufacturer headquartered in St Albans, Hertfordshire. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. In 2006, Premier Foods acquired the UK and Ireland businesses of Campbell's for £460 million. Brands included in the deal were Oxo, Batchelors, Homepride and Fray Bentos. The iconic Campbell's Soup cans had be rebranded as Batchelors Condensed Soup (as the brand itself was not acquired) but labels still carried the label "Formerly Campbell's. Same great taste." Similarly, Campbell's Meatballs were rebranded as Fray Bentos. Subsequently the closure, in December 2007, of the King's Lynn depot where Fray Bentos pies are made, was announced.

In March 2007, Premier Foods completed the takeover of its rival RHM for £1.2 billion. In July 2007 Premier foods announced it was to close the following RHM sites: Bristol, Droylsden (makers of Robertson's Golden Shred since 1890 and Sharwood's brands), Middlewich (makers of Bisto and Salts), Wythenshawe (makers of Sharwood's Pappadoms and Paxo), Ledbury (makers of specialist jams) and Reading (Foodservices).

Financial Highlights (In GBP as of 12/31/2008)

Total Revenue

2,603,600,000

EBITDA

(403,900,000)

Operating Income

(40,500,000)

Net Income

(443,800,000)

Total Assets

4,095,400,000

Current Assets

762,000,000

Total Liabilities

3,103,600,000

Current Liabilities

1,071,900,000

Long Term Debt

1,632,600,000

Stockholders' Equity

991,800,000

Ratio Analysis

Profitability Ratios

12/31/2008

12/31/2007

 

 

 

ROA % (Net)

-10.81

-2.29

ROE % (Net)

-36.1

-6.59

ROI % (Operating)

-1.37

3.61

EBITDA Margin %

-15.51

-3.27

Calculated Tax Rate %

EBT<0

EBT<0

 

 

 

Liquidity Indicators

12/31/2008

12/31/2007

 

 

 

Quick Ratio

0.33

0.47

Current Ratio

0.71

0.8

Net Current Assets % TA

-7.57

-3.77

 

 

 

Debt Management

12/31/2008

12/31/2007

 

 

 

LT Debt to Equity

1.65

1.05

Total Debt to Equity

1.82

1.12

Interest Coverage

-

9.94

 

 

 

Asset Management

12/31/2008

12/31/2007

 

 

 

Total Asset Turnover

0.63

0.81

Receivables Turnover

8.03

8.99

Inventory Turnover

11.63

13.68

Property Plant & Equip Turnover

4.17

5.21

Cash & Equivalents Turnover

80.51

141.8

 

 

 

Per Share

12/31/2008

12/31/2007

 

 

 

Cash Flow per Share

0.1

0.35

Book Value per Share

1.17

1.73

The above table indicate that the profitability position of Premier Foods Plc is very weak. The company is suffering from its bad days as all the profitability ratios are negative which means that the company is suffering losses and is likely to suffer the same in near future. It is also seen that the profitability condition of Premier Foods plc is worst in 2008 as compared to 2007.

Liquidity position of Premier Foods is also very weak. According to the rule, liquidity ratios of less than 2 are dangerous because it means that the company is short of resources. This means that Premier Foods Plc is unable to pay-off its short term debts. It is rather apparent that Premier Foods Plc is strong to trounce if one is looking for steady profits development, very good fundamentals and convincing valuations. It is an very good proxy to the financial development in United Kingdom. Premier Foods Plc is exclusive as a untainted retailing and circulation business with nearly no alike gazes in the country. All other businesses in the district have some pattern of integration (Downstream and upstream), which adds to their profits instability due to fluctuating prices. The frosting on the baked cake is that Premier Foods Plc is a UK bull - household charges increase with currency flaw and repaired margins double-check higher profits. Earnings are immune from cost fluctuations, part fundamentals are very good and deregulation is expected (Archer, 2008). As the government regulates margins for retail businesses, it is anticipated that the foremost determinant ...