Interim Sales and Profits Fall at Premier Foods
Premier Foods, the UK convenience food manufacturer, has reported a 1.8% fall in group sales to £348.0 million for the 26 weeks ended 1 October 2016 – compared to the corresponding period in 2015 – with underlying trading profit down by £2.0 million to £48.0 million, partly due to increased marketing investment.
Total sales in the Grocery business were £250.3 million in the first half of the year – 4.0% lower than the prior year as growth in non-branded sales was offset by a decline in branded sales to £212.8 million. A good sales performance in the first quarter of +1.9% was offset by lower sales in the second quarter. Divisional contribution was £4.0 million lower in the period at £56.2 million due to lower Q2 volumes and higher consumer marketing.
Total sales in the Sweet Treats business increased by 4.1% in the first half of the year and by 6.4% in the second quarter; this being the sixth successive quarter of sales growth. Branded sales grew by 2.7% while non-branded sales were strongly ahead of the prior year; up 12.5%. Divisional contribution was £6.6 million in the half, £0.8 million lower than the prior year.
Sales in the International business increased by over 9% in the first half of the year driven by strong performances in Australia and the USA. On a constant currency basis, sales were up approximately 4% reflecting weaker sales in Ireland.
Gavin Darby, chief executive of Premier Foods.
Premier Foods expects to spend approximately £36 million on consumer marketing investment in this financial year. This is in line with the prior year and is the equal highest amount of annual marketing spend the group has ever made. During the course of the 2016/17 financial year seven brands will benefit from TV advertising.
“Following a good first quarter where we saw a number of our brands in growth, the second quarter was much weaker in our Grocery business due to warmer weather which resulted in lower sales in the first half overall. However, our Sweet Treats and International businesses continued to demonstrate their strong momentum, delivering against our strategic priorities and growing over 4% and 9% respectively,” says Gavin Darby, chief executive of Premier Foods.
He continues: “We remain very confident in our strategic progress, our customer relationships are strong and we have an extensive new product innovation programme planned for the balance of the year. We are pleased with the progress that we have made on the 2016 triennial pension scheme valuations, which has resulted in the NPV of the pension deficit recovery plan expected to reduce by about £100 million. We expect group sales to grow between 2-4% in the second half of the year and our profit and net debt expectations for the full year remain unchanged.”
