FDBusiness.com

Premier Foods has reported a 0.6% rise in group sales to £771.7 million for the 52 weeks ended 2 April 2016 with trading profit at £131.0 million in line with the previous year and the company’s expectations. Although branded sales at the UK-based food group were flat, six of its eight largest brands delivered average sales growth of 3.4% during the year. As these six brands had received more focused innovation and marketing investment over the last two years, this result indicates that Premier Foods’ innovation and brand marketing strategy is working.

Adjusted profit before tax increased by £2.9 million to £86.1 million. However, Premier Foods made a loss before tax of £13.0 million for the year compared to a prior period loss of £135.6 million as operating profit of £54.5 million was offset by net finance costs of £44.9 million and a share of loss from associates of £22.6 million.

On 23 March 2016, the group announced a number of strategic initiatives to help accelerate growth across its three business units of Grocery, Sweet Treats and International. Premier Foods has also entered into a co-operation agreement with Nissin Foods Holdings of Japan.

With annual revenues of around US$3.8 billion and operating profit of around US$216 million, Nissin Foods Holdings, which invented the world’s first instant noodles in 1958, operates in 19 different countries, spanning Asia Pacific, the Americas, Europe, Middle East and Africa. It is a global leader in instant noodles holding the number one or two positions in key markets, including Japan, the United States and Brazil and has a growing presence in chilled and frozen foods, cereal-based confectionery and yoghurt beverages in Japan. Nissin’s presence in Europe includes Hungary, Germany and Spain, with brands such as Cup Noodles, Soba and Top Ramen.

Nissin Food Holdings has taken a 19.9% shareholding in Premier Foods. The alliance provides Premier Foods with access to Nissin’s global network as well as the Japanese food group’s portfolio of innovative products for distribution in the UK. Of course, Premier Foods was the subject of a recent failed £537 million takeover bid by McCormick & Company, the US-based spices and spices group.

Gavin Darby, chief executive of Premier Foods.

Premier Foods will continue with its strategy of investing behind its brands and bringing new innovative products along with pursuing its supply chain efficiency programme. Investment in consumer marketing was increased by 10% to approximately £36 million during the year. In its 2016/17 financial year consumer marketing investment is expected to increase again, to between £42 million and £44 million, with nine brands planned to benefit from television advertising.

“Our strategy of investing behind our brands and bringing new innovative products to market continues to deliver very positive results, with six of our major brands growing on average +3.4% in the year,” says Gavin Darby, chief Executive of Premier Foods. “Our adjusted earnings per share increased by +4.6% in the year, we reduced net debt by over £50 million and on an accounting basis our pension schemes have an improved financial position.”

He adds: “We recently set out some additional strategic initiatives which we believe will further accelerate our growth and now expect to deliver sales growth of 2-4% in both FY16/17 and the medium term. The potential opportunities presented by our partnership with Nissin are also very exciting. The board is focused on delivering shareholder value and we see a strong future for Premier Foods with its leading category positions, great brands and strong operational cash flows.”