The positive results will help the firm reduce its net debt to between £840m and £860m, down from its current figure of £890m. The reduction may seem like a drop in the ocean, but it has obviously whetted investor appetite in the food group, as shares rose 6.5% to 90.7 pence this morning.
The creator of British classics Hovis bread and Bisto has put the 50% jump in first-half trading profit down to cost cuts.
‘We have already completed the actions to deliver the promised £20m of overhead cost savings for 2013 and continue to keep a tight control over costs,’ said chief executive Gavin Darby.
‘The restructuring of our bread and milling business is ahead of plan and we are taking the decisions necessary to create a more sustainable platform for this business.’
The company went through some refinancing last year, selling off assets such as Hartley’s jam and Branson pickle to reduce the debt bill. It also sliced its bread arm, closing bakeries and cutting jobs to reduce capacity.
Despite the good news, analysts predict the company will need to raise £200m of equity to fix its balance sheet. So despite offloading Branston and Hartley’s, the company remains in something of a sticky pickle.