Shares in Premier Foods slumped over 10% this morning after the food giant reported disappointing second quarter results and warned that first-half trading profit was now likely to be slightly below the prior year.
During the 13-week period ending 1 October, the group’s total sales slid 5.4% to £172.5m as warm weather in September impacted demand for some of its key products.
For the first half as a whole, group sales were 1.8% lower and Premier Foods said that as a result trading profit was now expected to be slightly lower than expected. However, its stressed that profit expectations for the full year remain unchanged due to the “careful management of costs”.
Sales in the group’s core grocery division were down 9.5% in the quarter with branded lines falling 12.4% as the warm weather lessened demand for its gravy and stocks lines, as well as desserts. However, the group stressed that it grocery innovation programme in the first half had been well received, particularly its Ambrosia Deluxe range, with a number of new initiatives across a number of brands set to launched to market in the second half of the year.
Grocery non-branded sales increased 8.8% in the quarter due to higher business to business volumes, whilst sales in its Sweet Treats division rose 6.4%. Its international business also continued to make good progress, with sales up over 13% in the period. Cadbury cake ranges launched in the United Arab Emirates for the first time towards the end of the quarter.
Despite the disappointing performance in its grocery business, Gavin Darby, Chief Executive Officer, commented: “We remain very confident in our strategic progress, our customer relationships are strong and we have an extensive new product innovation programme planned for the balance of the year. We expect group sales to grow between 2-4% in the second half of the year and our profit expectations for the full year remain unchanged.”