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Challenging Year For Premier Foods

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Challenging Year For Premier Foods

Challenging Year For Premier Foods
May 17
12:40 2017

Premier Foods, the UK convenience food group, has reported a 1.4% decrease in underlying sales to £790.4 million for the 52 weeks ended 1 April 2017, with underlying trading profit of £117.0 million, down from £129.1 million in the previous year. On a statutory basis, revenue grew by 2.4%, reflecting the inclusion of results from Knighton Foods in the 2016/17 financial year, and profit before tax was £12.0 million, compared to a loss before tax in the previous year of £13.0 million.

Premier Foods’ core Grocery business unit reported full year underlying sales of £563.1 million, which were 2.6% lower than a year ago. The Grocery business has been impacted by changing retailer promotional strategies during the course of the year, and particularly in the second half. A variety of different promotional deals for products sold in major retailers have long been a feature of the grocery landscape in the UK. Premier Foods continued to pursue its strategy of bringing new innovative products to market during the year, with Oxo Stock Pots, Ambrosia Deluxe custard and Batchelors Super Noodles in a pot format all contributing to market share gains for their respective brands.

Grocery non-branded underlying sales increased by £7.8 million in the year to £81.1 million. Business to business sales performance at Knighton Foods was a key contributor to this growth, with volumes increasing as this business transitioned through its recovery phase.

Sweet Treats delivered sales growth of 1.9% in the year to £227.3 million, and grew sales in the first three quarters of the year.

The group’s International business unit continues to demonstrate strong progress and has now delivered ten successive quarters of sales growth. In the year, sales were 18% ahead and up 11% on a constant currency basis.

During the year, Premier Foods announced substantial cost savings programmes designed to deliver £20 million benefits over next two years. One part of this programme is a significant logistics restructuring which will combine the warehousing and distribution operations of both the Grocery and Sweet Treats businesses into one centralised location.

Gavin Darby, chief executive of Premier Foods.

Gavin Darby, chief executive of Premier Foods, comments: “This financial year has been a challenging one for the industry, with the return of food inflation and changing retailer promotional strategies. Despite this, we have grown market share in six of our eight largest brands, outperformed many of our peers in the latter part of the year and accelerated International sales growth to 18%. We have continued to invest in brand innovation and marketing, our customer relationships remain strong and we recently agreed a £32 million reduction in cash payments to our pension schemes over the next three years.”

He elaborates: “With the industry changing rapidly, we have updated our strategy to give an equal focus to revenue growth, cost efficiencies and cash generation. In the UK, growing ahead of our categories continues to be a core objective for us and our plans for International are for further strong growth. We are excited by our global strategic relationships with Cadbury and Nissin and our recently announced cost savings programme is expected to deliver £20 million over the next two years. We are focused on reducing our leverage ratio through profit improvement and debt reduction.”

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