Profit Warning From Premier Foods
Following a decline in third quarter sales, despite six out of eight of its major brands gaining volume and value market share, Premier Foods has warned that its revenue and trading profit for the full year will be lower than previously anticipated.
“Sales in our third quarter were weaker than expected despite a strong December. We now expect category performance to remain challenging during the fourth quarter and as a result sales will be below previous expectations,” explains Gavin Darby, chief executive of Premier Foods. “Additionally, recovery of significant input cost inflation in certain areas is taking longer than originally foreseen. Consequently, we now expect trading profit for FY16/17 to be approximately 10% below previous expectations.”
The UK convenience food group is about to commence a substantial three year cost reduction and efficiency programme designed to significantly improve operational efficiencies in the supply chain from FY17/18, particularly in warehousing and distribution. Additionally, the group will continue to streamline processes in all business units and is actively exploring further opportunities to deliver significant cost savings across its SG&A cost base. This programme is expected to deliver incremental cost savings of £10 million from FY17/18 with equivalent further savings the following year.
“This programme will support the company’s twin goals of delivering trading profit and free cash flow while investing in innovation and consumer marketing,” he says.
