Premier Foods has reported increased revenues and higher underlying profits for the year to 30 March, boosted by growth of largest brand and restructuring initiatives. However, it warned that the first half of this year would be slower, with update on its strategic review expected soon.
Full year revenue edged up 0.6% to £824.3m after a 3.1% rise in its fourth quarter, which benefitted slightly from Brexit-related stockpiling.
Adjusted pre-tax profit increased 12.1% to £88.0m, although on a statutory basis the company recorded a loss of £42.7m. This was due to a £30.6m impairment loss on its Saxa salt and Sharwood’s brands, restructuring costs of £16.8m, and a £41.5m charge for pensions.
Branded revenue grew by 1.4% to £679.2m, while non-branded revenue slipped 2.7% to £145.1m. Premier’s largest brand, Mr Kipling, was a star performer with its revenue increasing by 12% following relaunch activity. The group’s Ambrosia, Angel Delight, Batchelors, Sharwood’s and Soba brands also performed well. However, its Loyd Grossman cooking sauces saw weaker sales as it cut back on low margin promotional activity.
Sales in Premier’s International unit declined by 12.5% as a result of Cadbury cake overstocks and lower export distributor volumes.
Alastair Murray, acting chief executive at Premier Foods, said: “Premier Foods has delivered consistent progress over the last two years, growing revenue, trading profit, adjusted earnings and reducing net debt.
“This year we plan to increase investment in both capital projects and consumer marketing, with up to five of our biggest brands expected to benefit from TV advertising. We have plans to launch an exciting new brand, ‘Plantastic’, using plant- based ingredients, in response to current consumer trends and we expect our International business to return to double digit growth in the coming year.”
The debt-laden firm announced back in February that it was launching a strategic review aimed at increasing shareholder value. Premier Foods’ Chairman, Keith Hamill, also invited two rebel investors – Oasis Management and Paulson & Co – onto its boardroom as non-executive directors following months of fractious relations.
Recent reports have suggested that the business could be broken up following failed attempts to sell-off its Ambrosia and Batchelors brands. The group said today that its strategic review remains ongoing with an update to follow in due course.
NAM Implications:
- Issue will be whether this rate of improvement will satisfy the City in the current climate…
- Some benefit in competitors conduct what-ifs re breakup.
- And identifying possible cherry-picking opportunities?
