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Strong Interim Results by Premier Foods Prompts a Rise in Full Year Trading Profit Outlook

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Strong Interim Results by Premier Foods Prompts a Rise in Full Year Trading Profit Outlook

Strong Interim Results by Premier Foods Prompts a Rise in Full Year Trading Profit Outlook
November 12
09:36 2020
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Premier Foods has reported a 15% rise in group revenue to £421.5 million for the 26 weeks to 26 September 2020 with statutory profit before tax up by £35.5 million to £50.5 million compared to the same period a year ago. Trading profit grew 28.7% to £65.8 million after increased marketing investment and incremental COVID-19 costs. Adjusted profit before tax rose 50.2% to £47.7 million.

Premier Foods’ branded revenue increased by 18.6% to £367.3 million while non-branded revenue declined by 4.9% to £54.2 million.

The UK food group employs a branded growth model strategy which leverages the strength of its market leading brands. In following this strategy, revenues in the UK have displayed growth for the last thirteen quarters. Premier Foods grew faster than all its categories during the period, continuing the trajectory from the previous financial year, delivering 75 basis points of share growth for the 26 weeks to 26 September 2020.

Alex Whitehouse, Chief Executive Officer of Premier Foods, comments: “In the first half of the year, demand for our branded product ranges has been exceptional, particularly in our Grocery businesses which have helped deliver strong profit growth, accelerated debt reduction and a lowest ever net debt/EBITDA ratio of 2.3x. We have seen many more meal occasions being consumed at home, particularly in the first quarter, followed by a transition towards more normal levels of demand through quarter two. During this entire time, we have continued to drive our branded growth model, launching insightful new products and supporting our three biggest brands with above the line advertising. Consequently, we have continued to grow faster than all our categories, increasing market share in each one; a reflection not only of our strong brands but also the amazing performance of our supply chain colleagues to ensure product availability. In online, we have grown +112% which is again ahead of channel growth, leading to a market share gain of 260 basis points.

Alex Whitehouse.

“During recent months, the health and wellbeing of all our colleagues has remained our top priority. We put in place a wide variety of measures across our locations at a very early stage to help keep our colleagues safe and all these measures will remain in place until we are certain they’re no longer required. I am extremely proud of the collective efforts of all our colleagues during this very testing period. Over recent months, we have also supported our communities by delivering nearly 9,000 cases of products to 28 hospitals and over 400,000 meals to those in need via Fareshare, the charitable food redistributor.”

He continues: “Looking to the second half of the financial year, we expect to see continued revenue growth driven by further new product innovation, strong commercial plans and increased marketing investment for our brands, with six major brands planned to be advertised on TV. We also now expect to see an increase in demand for our brands due to the impact of recently increased government restrictions on eating out. The longevity of this increased demand is likely to be linked to the duration of these new measures, and although we have tougher comparatives in the fourth quarter, we anticipate that trading profit for the full year will be ahead of current market expectations. Additionally, following both our recent progress in accelerating leverage reduction along with proceeds received from the Hovis transaction, we are announcing a new medium-term target for Net debt/EBITDA of approximately 1.5x.”

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