A day after Premier Foods shares fell sharply on worries about trading, the company behind Hovis and Branston Pickle has confirmed the worst.
It said first half trading profit would be between £65m and £70m compared to £94m at the same time last year. It blamed a 14% increase in commodity prices - equivalent to a £150m increase in costs in a full year - and the subsequent time lag before it could "reprice" its own products accordingly.
However this "repricing" seems to have upset one of its major customers, which delisted a significant number of its grocery lines. This cost it £10m in the first half although this has apparently now been resolved and the products are back on the shelves.
On top of that came a 5% decline in the grocery and bread markets thanks to the weak consumer environment and "unseasonably warm weather".
And its Brookes Avana business saw a £10m profit decline, including a £5m charge for restructuring at its Leicester plant - with the loss of 200 jobs - due to the loss of a pie contract with Marks and Spencer.
It is seeing signs of improvement in the second half, with Brookes Avana picking up new business to make up for the £30m in lost revenues at the division.
Even so it expects markets to be down year on year in the second half, and the outlook would be very dependent on Christmas trading.
So Premier's shares have dropped 3.38p to 21.1p, its second day as (so far) the biggest faller in the FTSE 250. Yesterday's decline was directly attributable to a - rather prescient as it now seems - negative note from Credit Suisse.
