After posting robust annual results, Premier Foods confirmed today that it was planning more price rises to offset increasing commodity and energy costs.
Over the 12 months to 2 April 2022, the maker of brands such as Mr Kipling, Sharwood’s, and OXO delivered a trading profit of £148.3m, the same as the previous year but above its forecast of at least £145m. Adjusted pre-tax profits rose 11.4% to £128.5m
Revenues were down 3.6% to £900.5m after the group faced tough comparatives with the previous year when demand for branded products surged in supermarkets at the height of the pandemic. On a two-year basis, sales were up 6.3%, with Premier Foods saying it was still seeing strong branded growth that was driving volume and value market share gains in both its Grocery and Sweet Treats divisions.
Analysts have recently suggested that branded food & drink manufacturers may suffer a drop in demand as cash-strapped consumers trade down to supermarket own-label lines.
Although Premier Foods does not have any direct exposure to Russia or Ukraine, it confirmed today that it was being affected by the rising price of commodities such as wheat and dairy, surging energy prices, and the slowing UK economy.
Chief Executive Alex Whitehouse revealed that the group had raised its prices by “high single digits” during the last year, but is expecting to ramp them up further with a “low double-digit rise” in the year ahead.
He said the rises would be spread across its brands, although it is also launching efficiency programmes to offset as much of the cost inflation pressures as it can to try to keep prices down. Whitehouse added: “Food inflation is pretty significant, and for some families, that’s going to be really tough.”
The warning comes as official figures revealed today showed inflation hit a 40-year high of 9% in April – and it is expected to soar past 10% later in the year. Earlier this week, Bank of England Governor Andrew Bailey sparked further fears but issuing an “apocalyptic” warning about rising food prices.
Whitehouse concluded: “Our initial trading so far this year has been encouraging, in line with our plans, and we are seeing strong market share gains as consumers increasingly look for good value meal solutions.
“With this positive momentum, and the resilience of our brands, categories and supply chain, we are confident of delivering another year of good progress.”
