LONDON — The Bread division of Premier Foods P.L.C. posted profit of £22.5 million ($35.3 million) in the first half ended June 30, down 27% from £30.7 million in the first half of fiscal 2011. The decline reflected lower market volumes, increased promotional activity and higher net costs to serve in the supply chain.

Total sales in the Bread division, excluding milling sales, fell 2% to £253.1 million ($396.7 million). Milling sales during the first half totaled £95.2 million ($149.3 million), down 8% from the same period a year ago.

“Hovis continued to maintain branded market share driven by improved customer collaboration, promotional investment, advertising and innovation, including the launch of Hovis Farmer’s Loaf,” the company said. “Further new products are expected to be launched over the coming months. Non-branded bread sales increased by 1.5% due to net contract gains with key customers.”

Overall, Premier Foods posted trading profit in the first half ended June 30 of £53.2 million ($83.4 million), up 3% from £51.5 million in the first half of fiscal 2011. Sales totaled £852.8 million ($1,337 million), down 15% from £1,004.7 million.

“I’m pleased with the progress we are making to stabilize the business, refocus the portfolio and invest in our future growth,” said Michael Clarke, chief executive officer. “Our strategy of focusing on our power brands is starting to gain traction. Power brand sales were up 2% and sales of grocery power brands increased by a healthy 4.9%, reflecting consistent improvement in market shares.”

Mr. Clarke said plans to simplify the business and drive further efficiency are on track, and the company expects to deliver £40 million in savings by the end of 2012.