* Underlying sales excluding milling up 2 pct in Q3
* Expects further savings of 20 mln stg in 2013
* Says full-year expectations remain unchanged
LONDON, Oct 23 (Reuters) - Premier Foods, Britain's biggest food producer, posted rising quarterly sales and said its restructuring programme was on track to help it meet its full-year expectations.
The group, which has been selling non-core businesses to bring down 1.3 billion pounds ($2 billion) of debt built up before the 2007 banking crisis, on Tuesday said it expected to cut costs by a further 20 million pounds in 2013 after saving some 40 million so far this year.
Premier, which owns iconic British food brands such as Hovis bread, Batchelors quick meals and Mr. Kipling cakes, posted sales from ongoing businesses, excluding milling, up 2 percent for the three months to September 30, helped by its focus on a slimmed-down portfolio of eight best-selling brands.
The company said it expected to raise 275 million pounds from asset disposals by the end of the year, which would cut its debts by 22 percent.
Premier Foods' efforts echo those of countless other European companies cleaning up their balance sheets while trying to drum up business against a backdrop of flaccid consumer demand, commodity inflation and volatile market conditions.
The food maker also said it had lost a bread contract due for renewal in mid-2013 worth about 75 million pounds in annual sales and was examining "a range of options" for its bread business, which accounts for nearly 40 percent of revenues.
It announced in August it was separating its bread business into a new division. Bread has proved a tricky business for Premier as well as rival Associated British Foods, as high wheat prices and costly logistics squeeze margins.
Premier secured breathing space by securing a 1.4 billion pound refinancing deal in March, which requires it to make 330 million pounds of disposals by June 2014.
Earlier this year, it sold its flour brand Elephant Atta and Sarson's vinegar and said it would sell its jam and spreads business to U.S. food maker Hain Celestial Group for 200 million pounds.
Shares in Premier Foods, which had traded at 288 pence five years ago, were up 2.5 percent at 82.6 pence by 0725 GMT, valuing the company at around 190 million pounds.