TIDMPFD TIDMIRSH
RNS Number : 8011E
Premier Foods plc
21 July 2016
Premier Foods plc (the "Company" or the "Group")
Trading update for the 13 weeks ended 2 July 2016
-- Q1 Group sales up +1.9%; Branded sales up +0.8%
-- Fourth consecutive quarter of sales growth
-- Expectations for Full Year remain unchanged
Gavin Darby, Chief Executive Officer
"We are very pleased by the further improvement in our sales
performance, which demonstrates four consecutive quarters of growth
and continued momentum in the business. Our category strategy of
investing behind our brands continues to deliver results, despite
the wider deflationary grocery market in the UK. While the economic
environment is more uncertain following the EU referendum outcome,
our immediate financial exposure is expected to be limited. Given
our strong brands and UK manufacturing cost base, we believe we
remain well placed to make progress and our expectations for the
full year remain unchanged."
Q1 Sales % change Grocery Sweet Group
Treats
Branded 0.9% 0.5% 0.8%
Non-branded 9.0% 11.9% 9.8%
-------- -------- ------
Total 1.9% 2.0% 1.9%
Trading update
The Group delivered sales growth of 1.9% in the first thirteen
weeks of the 2016/17 financial year, with Branded sales up 0.8% and
Non-branded sales ahead 9.8%. On a divisional basis, sales grew by
1.9% in Grocery and sales in Sweet Treats increased by 2.0%.
In the Grocery business Bisto continued its strong momentum from
the prior year into the first quarter, while Loyd Grossman sauces
also performed well as its premium pouches range and Bolognese
sauces continued to prove very popular with consumers.
Ambrosia returned to growth in the quarter, following the
launches of the new Deluxe custard range and Frozen custard
ice-cream. Additionally, the brand benefitted from TV advertising
in the period with the 'Taste of Happy' campaign and the deluxe
range performing particularly well. Ambrosia's performance in the
first quarter this year further demonstrates that the Group's
strategy of investing behind its brands can be effectively applied
across its portfolio. In the second half of the year, the Group is
planning to make a significant investment in its Batchelors range,
with new products High Veg pots, High Protein Pots and Soup Dippers
launched to market. This new range of products are aligned to
current consumer trends and have been well received by retail
customers.
Non-branded sales in the Grocery business increased 9.0%
benefitting in particular from increased sales at Knighton
Foods.
Sweet Treats continued to benefit from strong Cadbury cake
performances, reflecting continued growth of new products such as
Cadbury Amaze Bites while also seeing strong sales from the core
Cadbury cake range. Non-branded Sweet Treats grew by 11.9% due to
contract wins in both major retailers and the discounters' channel,
while Mr Kipling sales were lower as a result of higher promotional
activity in the prior year period. The Cake-On-The-Go range of twin
pack Mr Kipling and Cadbury cakes designed for the convenience
market is building distribution and seven different formats are now
available in market. The launch of the Mr Kipling Cup Cake range
exclusively in one major retailer is also performing well.
International sales grew approximately 5% in the quarter due to
a strong performance in Australia and the business unit has now
delivered growth for seven successive quarters. Additionally, good
progress is being made in delivering against the strategic
initiative of extending the Group's cake brands in the USA and
Middle East.
Work streams established for the co-operation agreement with
Nissin are now well underway, with collaboration on both sides
building well commercially and operationally. The Group expects to
be able to deliver tangible initiatives from these work streams in
2017.
As previously announced, the Group expects to invest between
GBP42-44m in consumer marketing in the current financial year, with
nine of its brands planned to benefit from TV advertising in the
year. This represents a significant increase on the GBP36m invested
in the prior year and marks the third successive year of increased
consumer marketing investment.
One of the key roles of the Group's supply chain is to deliver
efficiencies which can then be re-invested in consumer marketing.
Efficiency programmes including streamlining the supply chain's
management teams, delivering line efficiency improvements and
optimisation of its logistics operations are all well on track.
The Group recognises the broader macroeconomic uncertainty
created by the UK electorate voting to the leave the European
Union. In overall terms, the FY16/17 financial impact to the Group
of the UK voting to leave the EU is expected to be low. The Group's
main direct foreign currency exposure is with respect to Euros of
which it is a net purchaser of approximately EUR50m per annum,
however it is substantially hedged against the Euro for the
remainder of FY16/17. One of the Group's strategic initiatives is
to deliver international sales growth sourced from its UK
manufacturing cost base and this is expected to be significantly
supported by the recent devaluation of Sterling. While financial
market movements will affect the net pensions' position, certain
hedging instruments are in place and additionally, the Group's
pension deficit contribution payments are fixed through to the end
of 2019.
Outlook
As outlined at its recent Investor and Analyst visit to its
Lifton Desserts centre of excellence, the Group's focus on
innovation and brand investment is delivering demonstrable results,
with more exciting initiatives to come. Having delivered four
successive quarters of sales growth, the Group considers it is well
placed to make progress and its sales, profit and Net debt
expectations for the year remain unchanged.
Ends
For further information, please contact:
Institutional investors and analysts:
Alastair Murray, Chief Financial +44 (0) 1727 815
Officer 850
Richard Godden, Head of Investor +44 (0) 1727 815
Relations 850
Media enquiries:
Richard Johnson, Corporate Affairs +44 (0) 1727 815
Director 850
+44 (0) 1727 815
Marisa Fitch, Head of External Affairs 850
Maitland
+44 (0) 20 7379
Kate O'Neill 5151
Tom Eckersley
Conference Call
A conference call for investors and analysts will take place on
21 July 2016 at 9.30am, details of which are outlined below. A
replay of the conference call will be available on the Company's
website later in the day.
http://www.premierfoods.co.uk/investors/results-centre
Telephone number: +44 1452 555566
Telephone number
(UK Toll free) 0800 694 0257
Conference ID: 49360726
Notes to editors:
1. All sales data is for the thirteen weeks to 2 July 2016 or 4
July 2015 as appropriate.
2. FY15/16 Q1 sales are stated on a pro forma basis and are
re-stated as if the Company owned the recently acquired Knighton
Foods for the comparative period.
3. Q1 sales segmental disclosure:
Q1 Sales (GBPm) FY16/17 FY15/16 % Change
Q1 Q1
Grocery
Branded 111.1 110.1 0.9%
Non-branded 17.5 16.1 9.0%
-------- -------- ---------
Total 128.6 126.2 1.9%
Sweet Treats
Branded 40.2 40.0 0.5%
Non-branded 6.7 6.0 11.9%
-------- -------- ---------
Total 46.9 46.0 2.0%
-------- -------- ---------
Group
Branded 151.2 150.1 0.8%
Non-branded 24.3 22.1 9.8%
-------- -------- ---------
Total 175.5 172.2 1.9%
-------- -------- ---------
Certain statements in this Trading Update are forward looking
statements. By their nature, forward looking statements involve a
number of risks, uncertainties or assumptions that could cause
actual results or events to differ materially from those expressed
or implied by those statements. Forward looking statements
regarding past trends or activities should not be taken as
representation that such trends or activities will continue in the
future. Accordingly, undue reliance should not be placed on forward
looking statements.
A Premier Foods image gallery is available using the following
link:
http://www.premierfoods.co.uk/media/image-gallery
This information is provided by RNS
The company news service from the London Stock Exchange
END
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