THE future of the West Devon-based Ambrosia factory was thrown up in the air this week, following an announcement from owners Premier Foods.

The Premier Foods group announced on Tuesday that it was in discussions with third parties regarding ‘the potential disposal’ of Ambrosia, based in Lifton, in a strategy to reduce its ‘net debt’ by £25-million per annum and accelerate the company’s turnaround.

In a statement giving its half-yearly results, chief executive of Premier Foods Gavin Darby said the company reported a revenue growth of 1.3% in the first half, a 6.2% increase in trading profit and net debt £26-million lower compared with last year.

He said: ‘While we are committed to our strategy of improving operating performance and targeting a net debt to EBITDA ratio below 3.0x by March 2020, we are also working in parallel to identify other strategic opportunities to accelerate the company’s turnaround. The board has determined that we should focus resources on areas of the business which have the best potential for growth through accelerated investment in consumer marketing and high return capital projects.

‘Accordingly, we are pursuing options to fund these plans as well as delivering a meaningful reduction in net debt, through discussions with third parties regarding the potential disposal of our Ambrosia brand. Although there is no certainty that any transaction will complete, we will update shareholders in due course.’

Premier Foods said that Ambrosia had taken a hit in profits following the prolonged period of higher than average temperatures. It said Ambrosia saw lower revenues in the first half of the year due to a ‘pro-active decision’ to reduce the levels of promotional investment which in turn reduced volumes and lower sales of custard products due to the hotter summer.

The company completed a major infrastructure project only last month to connect the Ambrosia Creamery to a natural gas mains pipe in order to reduce the factory’s reliance on fuel oil brought by road, costing £4-million to be paid over the next five years.

Ambrosia celebrated its 100th anniversary last year, after being opened on the same site in 1917 by Alfred Morris. The first Ambrosia product was dried milk powder, intended for infants but was sent out to soldiers fighting in World War One.

Pictures from last year’s centenary celebration, which saw the Duke and Duchess of Cornwall visit the factory in Lifton.