Premier Foods Posts 1.9% Rise In Q1 Sales; Downplays Impact Of Brexit Vote

Premier Foods stressed today that it remained on its path to recovery after posting sales growth of 1.9% in the first quarter of its financial year.

Branded sales edged 0.8%, whilst non-branded sales grew a more healthy 9.8%. On a divisional basis, sales grew by 1.9% in Grocery and sales in Sweet Treats increased by 2%.

In its Grocery business, the group said that Bisto continued its strong momentum, while Loyd Grossman sauces also performed well, boosted by demand for its premium pouches range and Bolognese sauces.

Meanwhile, Ambrosia returned to growth in the quarter, following the launch new lines and a TV advertising campaign.  The group said that Ambrosia’s recent success further demonstrated that its strategy of investing behind its brands can be effectively applied across its portfolio. In the second half of the year, Premier is planning to make a significant investment in its Batchelors range, with new products High Veg pots, High Protein Pots and Soup Dippers launched to market.

Non-branded sales in the group’s Grocery business increased 9%, benefitting from increased sales at Knighton Foods.

Meanwhile, Sweet Treats continued to benefit from strong Cadbury cake performances. Non-branded Sweet Treats grew by 11.9% due to contract wins in both major retailers and the discounter channel, while Mr Kipling sales were lower as a result of higher promotional activity in the prior year period.

International sales grew around 5% in the quarter due to a strong performance in Australia and expansion of the group’s cake brands in the US and Middle East.

Premier added that “work streams” established for the recent co-operation agreement with Nissin are now well underway, with collaboration on both sides building well commercially and operationally. It said that it expects to be able to deliver tangible initiatives from these work streams in 2017.

As previously announced, the group said it expects to invest between £42-44m in consumer marketing in the current financial year, with nine of its brands planned to benefit from TV advertising in the year. This represents a significant increase on the £36m invested by the business in the prior year.

Meanwhile, the group said that the financial impact on its business from vote to the leave the European Union is expected to be “low” in its current financial year. Premier’s main direct foreign currency exposure is with respect to Euros of which it is a net purchaser of approximately €50m per annum. However, the group said it had substantially hedged against the Euro for the remainder of FY16/17. It added that one of its strategic initiatives was to deliver international sales growth sourced from its UK manufacturing cost base and this is expected to be significantly supported by the recent devaluation of Sterling.

Gavin Darby, Chief Executive Officer, commented: “We are very pleased by the further improvement in our sales performance, which demonstrates four consecutive quarters of growth and continued momentum in the business. Our category strategy of investing behind our brands continues to deliver results, despite the wider deflationary grocery market in the UK. While the economic environment is more uncertain following the EU referendum outcome, our immediate financial exposure is expected to be limited. Given our strong brands and UK manufacturing cost base, we believe we remain well placed to make progress and our expectations for the full year remain unchanged.”