STOCKWATCH Premier Foods higher after reassuring trading update; Investec 'buy'

Tue. July 15, 2008; Posted: 04:22 AM

LONDON, Jul 15, 2008 (Thomson Financial via COMTEX) -- PRRFF | Quote | Chart | News | PowerRating -- Premier Foods Plc. was higher in morning deals following a trading statement that Investec Securities said was reassuring as it repeated its 'buy' stance and 160 pence price target.

At 9:12 a.m., shares in Premier Foods were up 3/4 of a penny at 76-3/4 pence, while the FTSE 250 index fell 108.1 points at 8,337.6.

Britain's biggest food manufacturer said on Tuesday it is on course to deliver on its profit expectations for the full year while it reported a 7 percent increase in group sales in the first half.

Premier's debt had risen to 1.82 billion pounds by the end of June compared with 1.61 billion at the end of Dec. 2007, although finance director Paul Thomas expects the group's net debt to fall in the second half.

In response, Investec Securities said the guidance for trading profits "in line" with first half 2007 is consistent with its forecasts.

The broker noted Premier is reassuring on the critical concerns of input cost recovery and integration synergies and it thinks the 75 million pounds reduction in pension recovery payments over the next three years further sweetens the mix.

Elsewhere, Panmure Gordon said, while trading was in line,1 it is concerned about the net debt rise, noting its banking covenants will be breached if it does not fall by the year end.

The broker repeated its 'hold' view but placed its price target under review ahead of a conference call with the company. joe.brock@thomsonreuters.com jb1/ms1

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