Strong demand for its Mr. Kipling range has helped Premier Foods report relatively strong figures for its third quarter covering the run up to Christmas.
Over the 13 weeks ended 28 December, the group’s total sales rose 2.6%, with its core UK business recording a 3.6% increase.
The UK operation has now delivered 10 consecutive quarters of growth with its biggest brand, Mr. Kipling, again “instrumental to this continuing momentum”. The cake brand saw its sales climb 10% during the period, supported by TV advertising and new product ranges.
Overall sales in Sweet Treats division grew 8% with branded sales up 7.6% and non-branded increasing 8.8%.
However, sales in its Grocery division rose only 0.3% after better UK performance was partly offset by weaker International sales. Non-branded sales continued to fall, down 0.8%, whilst branded sales increased 0.5%.
Premier Foods Bisto and Ambrosia grocery brands both grew sales in the quarter, helped by advertising investment in Bisto and share gains for Ambrosia. Meanwhile, sales of Paxo stuffing were said to be “excellent” in the run up to Christmas.
The group revealed that its two-year programme to save £5m in costs to reinvest in its brands was making “very good progress”. It added that its previously announced strategic review was nearing conclusion and a further update would be provided as appropriate.
Premier Foods has been struggling with high debts and lacklustre growth in recent years, although recent figures have suggested that its performance is improving.
The company launched the review in February last year with the aim of increasing shareholder value following months of fractious relations with two rebel investors – Oasis Management and Paulson & Co – due to the group’s weak returns. Reports during 2019 suggested that Premier Foods could be sold or broken up after separate moves to sell its Ambrosia and Batchelor brands failed to come to fruition.
Chief Executive Officer, Alex Whitehouse said today: “Our proven branded growth model of delivering new product innovation based on consumer trends together with high quality advertising behind our major brands continues to work very well … This performance, in our key trading period, reconfirms our unchanged profit expectations for the full year and we remain on track to meet our Net debt/EBITDA leverage target of 3.0×5 by March 2020.”
Shares in Premier Foods rose over 2% in early trading following the release of the statement.
