- Mr Kilping cakes and Oxo stock cube producer Premier Foods said it expected to report a trading profit at the top end of market expectations, while also announcing a pensions deal that could reduce its contributions by 45%.

In an update for the year through March 2020, the company said trading in the fourth quarter continued positive momentum from the third, with volumes in March rising 'sharply' due to increased demand for groceries owing to the Covid-19 pandemic.

Sales in the fourth quarter were expected to grow about 3.6% on-year and about 10.5% in March.

In the UK, sales were expected to jump 7.3% in the fourth quarter and 15.1% in March.

The pension scheme agreement was struck after Premier Foods conducted a strategic review of its business that also involved it examining potential asset sales.

The agreement involved a merger of all the company's pension schemes, which the company said would generate a surplus that could be passed to remaining schemes in deficit and result in a 'vastly improved funding position'.

The net present value of of pension deficit contributions could reduce from the current £300-to-£320m by up to about 45% to £175m-to-£185m, it added.

'The segregated merger of the company's pensions schemes we are announcing today represents a ground-breaking agreement which is set to unlock benefits and value for all stakeholders in the company,' chairman Colin Day said.

'With a buyout of the RHM scheme getting progressively closer, any resulting surplus would be transferred to the remaining schemes and therefore result in significantly reduced pension deficit cash contributions by the company in future years.'

'The agreement we have reached follows extensive and highly collaborative discussions with all connected stakeholders, and marks a positive conclusion to the company's strategic review.'

'The group will continue to pursue its successful branded growth model strategy, opening up further opportunities to deliver value in due course.'

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