TIDMPFD TIDMIRSH
RNS Number : 5676L
Premier Foods plc
20 July 2017
PREMIER FOODS PLC
20 July 2017
Premier Foods plc (the "Company" or the "Group")
Trading update for the 13 weeks ended 1 July 2017
-- Q1 Sales down (3.1%), in line with Group's expectations for the quarter
-- Delivering market share gains in Grocery and Sweet Treats in competitive environment
-- Continued outperformance compared to industry peers
-- International sales up +20% in Q1; eleventh successive quarter of growth
-- First new products from Nissin strategic relationship now
delivered over GBP3m retail sales
-- Expectations for progress in full year remain unchanged
Gavin Darby, Chief Executive Officer
"Our first quarter sales were lower than last year, as we
expected, primarily due to lower sales volumes in the grocery
categories, notably desserts. At the retail level we have continued
to outperform our markets and industry peers, our international
business grew 20% in the quarter, and our cost savings programmes
are on track. We expect to report positive sales growth in the
second quarter, broadly flat sales in the first half and our
expectations to deliver progress in the full year are
unchanged."
Q1 Sales % change Grocery Sweet Group
Treats
Branded (7.9%) 1.4% (5.4%)
Non-branded 8.9% 17.8% 11.3%
-------- -------- -------
Total (5.6%) 3.8% (3.1%)
-------- -------- -------
Trading update
Sales in the first quarter were (3.1%) lower than the prior year
with a good performance in Sweet Treats held back by lower sales in
branded grocery. This was in line with the Group's
expectations.
The Grocery business saw encouraging market share gains in major
retailers and some pricing benefit in the quarter. However, the
reported sales quarter on quarter were adversely impacted by lower
market volumes partly reflecting a warmer June, lower promotional
effectiveness particularly in the Desserts category and a move to
more normalised levels of trade investment in non-retail channels.
Across the quarter, trading in April and May was encouraging while
June was slower in categories such as Flavourings & Seasonings,
Desserts and Cooking Sauces & Accompaniments.
At a retail sales level, the Group's performance was more
encouraging. According to research by Kantar Worldpanel, branded
sales rose +2.3% in the 12 weeks to 18(th) June, well ahead of the
majority of our competitors. While the overall outlook in the
grocery market remains competitive and challenging, the Group has
driven market share gains in Bisto, Batchelors, Loyd Grossman, Mr
Kipling and Cadbury cake in the first quarter, which underpins
confidence for the remainder of the year.
Accordingly, the Group anticipates stronger trends in the second
quarter and is beginning to see the reversal of the reduction in
multi-buy promotions which impacted its Grocery volumes in the
second half of last year.
The Group remains confident of delivering positive sales growth
in quarter two and broadly flat sales for the first half, assuming
normal UK temperature trends.
Batchelors delivered good progress in the quarter; after
declining for three years at an average of 6%, Batchelors grew
sales for the second consecutive quarter and regained its position
as market leader in its category. This growth was due to the launch
of the new convenient Super Noodles pot product in partnership with
Nissin and new flavours of its Pasta n Sauce range such as Smokey
Cheese and Pancetta. Additionally, and building on the early
success of the Super Noodles pot, the Group has just launched a new
range of Batchelors Pasta n Sauce in a convenient pot format
encompassing four flavour variants.
In Desserts, Angel Delight, one of the Group's smaller and
historically less invested in brands, recorded sales growth in the
first quarter of the year as a result of the launch of new ready to
eat Angel Delight pots. Ambrosia sales were noticeably lower as
changing promotional mechanics resulted in lower than expected
volumes in the quarter.
Sweet Treats continued to benefit from strong Cadbury cake
performances, as the core range increased volumes, sales and market
share. Mr Kipling returned to volume growth in the quarter, in part
due to the introduction of a new Gluten free range and Mr Kipling
indulgent tarts. The Group is expanding the reach of its Cake on
the go range through additional outlets and the introduction of Mr
Kipling Flapjacks.
The International business continued to make excellent progress
with sales up +20% in the quarter. The business unit has now
delivered growth for eleven successive quarters. Cadbury cake in
Australia continues to grow sales, volumes and market share and was
a major contributor to the International performance in the
period.
Non-branded sales in the Grocery business increased 8.9%
benefitting in particular from increased sales at Knighton Foods.
Sweet Treats Non-branded sales grew by 17.8% reflecting new
contract wins across both multiple and discount retail
customers.
Nissin partnership
In addition to the initial benefits from the launch of the
Batchelors Super Noodles pot outlined above, the Group also
significantly expanded the distribution of Nissin's Soba Noodles in
the quarter. This authentic noodle pot range is now listed in three
major retailers and its distribution has increased exponentially
following the support of the Group's commercial and category
management teams.
Cost reduction & efficiency programmes
The Group's cost reduction and efficiency programmes are
progressing well, and as planned. The SG&A re-sizing programme
is now complete and cost reductions, which are expected to deliver
savings of GBP10million this financial year, are flowing through.
The consolidation of the Group's warehousing and distribution
operations into one central location in Tamworth, Warwickshire, is
progressing in line with expectations. The Tamworth site is now
operational and on track to manage one third of the Group's volumes
by the end of July 2017. The transition from legacy facilities to
Tamworth is expected to complete by the middle of 2018.
Financial position
As previously announced, the Group concluded the issuance of
GBP210m senior secured floating rate notes on 5 June 2017.
Financing fees associated with the issuance of the floating rate
notes and the extension of the Group's revolving credit facility
with its bank syndicate are expected to be approximately GBP7m in
the current financial year.
Outlook
This financial year has started in line with the Board's
expectations. The Group remains confident of delivering growth in
quarter two, through continued market share gains and pricing
benefits and therefore expects sales to be broadly flat in the
first half of the year, assuming normal UK temperature trends. The
Group continues to work towards its strategic objectives and
expectations for FY17/18 sales and Net debt remain unchanged with
progress weighted to the second half of the year.
Ends
For further information, please contact:
Institutional investors and analysts:
Alastair Murray, Chief
Financial Officer +44 (0) 1727 815 850
Richard Godden, Director
of Investor Relations +44 (0) 1727 815 850
Media enquiries:
Marisa Fitch, Head of
Corporate Affairs +44 (0) 1727 815 850
Maitland +44 (0) 20 7379 5151
Neil Bennett
Tom Eckersley
Conference Call
A conference call for investors and analysts will take place on
20 July 2017 at 9.15am, 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 20 7192 8000
Telephone number (UK Toll
free) 0800 376 7922
Conference ID: 48550710
Notes to editors:
1 An analysis of the Group's performance in the
UK ambient grocery market over the last 12 weeks
can be found at http://www.premierfoods.co.uk/investors/results-centre
2 Sales data is for the thirteen weeks to 1 July
2017 or 2 July 2016 as appropriate.
Q1 Sales (GBPm) FY17/18 FY16/17 % Change
Q1 Q1
Grocery
Branded 102.3 111.1 (7.9%)
Non-branded 19.1 17.5 8.9%
-------- -------- ---------
Total 121.4 128.6 (5.6%)
Sweet Treats
Branded 40.8 40.2 1.4%
Non-branded 7.9 6.7 17.8%
-------- -------- ---------
Total 48.7 46.9 3.8%
-------- -------- ---------
Group
Branded 143.1 151.2 (5.4%)
Non-branded 27.0 24.3 11.3%
-------- -------- ---------
Total 170.1 175.5 (3.1%)
-------- -------- ---------
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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