Premier Foods is now forecasting that its annual profit will come in at the upper end of analysts’ expectations after seeing robust sales of its host of well-known brands during the Christmas period.
During its third quarter to 28 December, the group saw its total sales grow by 3.1%, driven by branded sales that increased by 4.6%. After recent investments in innovation and promotional pricing, its performance was driven by volume growth, which was 7% for its branded lines.
The group’s Grocery division saw overall sales increase by 2.2% after branded growth of 3.5% offset a 9.3% fall in non-branded. Premier Foods noted that its premium Ambrosia Deluxe and Bisto Best ranges performed well as consumers traded up over the Christmas period, while its Loyd Grossman cooking sauces delivered sales growth after benefitting from the roll-out of new lines. The group’s recently acquired brands grew double-digit, helped by new product launches by The Spice Tailor and FUEL10K. Meanwhile, Premier Foods said that non-branded sales had declined mainly due to the exit of some lower-margin contracts.
The group’s Sweet Treats division reported strong volume-led branded revenue growth of 8.9%, with both its Mr Kipling and Cadbury ranges said to have grown faster than the market. Non-branded Sweet Treats sales were in line with the same period a year ago.
Premier Foods overseas businesses enjoyed another strong quarter, with sales climbing 29% after its brands saw double-digit growth in all target regions.
“We are pleased to report another very good quarter of volume-led branded revenue growth, accompanied by further market share gains, as our branded growth model continues to deliver well for us,” said Chief Executive Alex Whitehouse.
He noted that the business had benefitted from consumers trading up and treating themselves in recent months after cost of living pressures started to ease for some people.
Whitehouse concluded: “Having delivered very good volume led, branded revenue growth in our key third quarter, we’re now guiding trading profit to the upper end of expectations for this financial year. As we look to the rest of FY24/25 and to the medium term, we expect to deliver further progress as we continue to execute against our five pillar growth strategy.”
Analysts at RBC Capital Markets called Premier Foods’ quarterly 7% volume growth “impressive” but said they expect this to moderate in the fourth quarter and during its next financial year.
