Premier Foods is moving into the second half of a major SAP implementation, and is slowing down promotional activity to concentrate on the move.
The company, which produces food brands including Oxo cubes, Mr Kipling cakes and Batchelors soup, is attempting to place all its operations on the platform.
Premier has acquired a series of major brands in recent years, buying Marlow Food Holdings in 2005, Campbell’s in 2006 and RHM last March. In its accounts Premier Foods anounced £17m of cost savings in 2007 through synergies between the companies, and has an overall target of £113m annual cost savings.
SAP will provide the company with an enterprise resource planning system, including management information systems, to support “lean admin functions”, the group said. In 2006, the company anticipated spending £25m to £30m in the following two years on the system. The next, key phase of the programme is the implementation of an “orders to cash” module, which will be carried out in this half of the year.
Robert Schofield, chief executive, said: “As we enter 2008, we are now operating in our three new divisions and our focus moves onto the implementation of some key modules of SAP, our new management information system, and our factory rationalisation programme.”
“We are now over half way through the transformation programme and we are delighted by the progress we have made and that the synergies continue to develop in line with our plan. As we enter 2008, we are now operating in our three new divisions and our focus moves from integration of the business to enhancing our manufacturing efficiency and information systems.”
Premier Foods will slow down promotions in order to concentrate on the implementation, and on factory rationalisation following its acquisitions, he added. “These major programmes require a level of operational stability, which will limit our promotional activity, particularly during the first half of 2008.”
As part of the integration of RHM, Premier Foods is also transferring RHM’s Manor Cakes business onto the group’s grocery IT systems.
The company also works with virtual network supplier Vanco which has implemented a multi-protocol label switching-based network across the group.
Premier Foods also incurred costs after a decision was taken to abort a system implementation within the RHM business, following that acquisition, and this contributed towards £21.8m of restructuring charges, alongside factory transformation and supply chain modifications. Operating profits to 31 December fell 24 percent to £76m as the integration of Campbell’s and RHM businesses contributed to £159m of overall exceptional costs.