Financial News

  • 27 January 2013, 6:18

Hovis And Oxo Boss Heads For Exit

The South African executive parachuted in to restore the health of Premier Foods, the owner of Hovis bread and Mr Kipling cakes, is poised to quit after less than 18 months in the job, Sky News has learnt.

Britain's biggest branded food manufacturer, Premier Foods has asked headhunters to identify a successor to Mike Clarke during the coming months. Russell Reynolds Associates is understood to have been appointed to oversee the search.

Mr Clarke's exit is not yet certain, and people close to Premier Foods cautioned on Friday that he could yet decide to remain with the company, although he is already understood to have been approached about a number of management roles at other UK-based companies.

If he does decide to step down, Mr Clarke's departure could be announced within weeks. It would come in the middle of an effort by the company to repair its finances after a disastrous few years during which Premier Foods almost collapsed under a mountain of debt.

In recent months Mr Clarke has orchestrated the sale of its sweet pickles and table sauces business, which included the Branston pickle brand, for 92.5m; its sweet spreads and jellies business, which included Hartley's, Robertson's and Sun-Pat, for 200m; and its vinegar and sour pickles unit, which included the Sarson's brand, for 41m.

It has effectively hoisted a 'for sale' sign above its bread division, the company's most significant operation following a restructuring that saw Goldman Sachs brought in to sound out prospective buyers, along with the closure of two bakery sites in the UK.

It also emerged this month that poor harvests had forced the company to abandon its policy of buying only British wheat, turning to European grain to make up the deficit.

Premier Foods continues to own some of the most popular products in British kitchens and is now pooling its marketing muscle behind a portfolio of what it calls 'power brands', which include Ambrosia, Loyd Grossman and Oxo.

Mr Clarke was poached by Premier Foods from Kraft Foods Europe, part of the group which bought Cadbury in a controversial deal in 2010, in July 2011. In his role at Kraft he was responsible for managing a business with revenues of $13bn, 58 manufacturing sites and 25,000 employees. Before that, Mr Clarke worked at The Coca-Cola Company and Reebok, the sporting goods manufacturer.

He arrived at Premier with a strong financial incentive to rebuild the group, but is understood to have become disillusioned with the scale of the necessary balance sheet restructuring.

When he joined, one analyst called his job "the toughest in European grocery". Premier Foods, which employs about 9000 people and has annual revenue of about 2bn, has shed thousands of jobs during Mr Clarke's brief tenure as he battled to repair the company's finances.

Last week, the company issued a trading update which said that its sales performance in the final quarter of last year was in line with board expectations, prompting Mr Clarke to say: "While the market continues to be challenging, I'm encouraged by the progress we have made in 2012. This provides a solid platform to continue our growth momentum in 2013."

Premier Foods has a suitable successor already working for the company, according to food industry analysts, who pointed to Geoff Eaton, chief operating officer, as the most likely internal candidate to replace Mr Clarke, who was paid almost 2.3m last year. Mr Eaton previously ran Uniq, the dairy producer. The search to replace Mr Clarke is also understood to include external candidates.

A Premier Foods spokesman declined to comment on the hunt for a successor to Mr Clarke, who also declined to comment.

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