FDBusiness.com

Premier Foods has reported a 5.1% increase in trading profit to £123.0 million on group revenue up 3.6% to £819.2 million for the 52 weeks ended 31 March 2018. Branded revenue grew by 1.6% to £670.1 million while non-branded revenue was up 13.9% to £149.1 million.

Trading profit benefitted from the improved commercial performance as well as a disciplined focus on cost and efficiency. Adjusted profit before tax was up 5.9% on the prior year to £78.6 million and statutory profit before tax rose 74.2% to £20.9 million.

Revenues in the Grocery business unit grew by 4.6% in the year to £589.2 million, as branded revenues advanced 3.4% and non-branded revenue increased by 12.1%. In the Sweet Treats business, revenues were £230.0 million, a 1.2% increase on the prior year.

Premier Foods’ International sales increased by 25% during the full year – the third consecutive year of strong progress. Over this three year period, revenue has increased by 92%. International revenue of £61 million now accounts for 7.5% of Premier Foods’ total revenue and has grown at a compound annual growth rate of 24% over the last three years.

Premier Foods’ strategic partnerships with Nissin and Mondelez International delivered strong revenue growth of 19% during the year. The partnership with Nissin includes their support in developing the Batchelors Super Noodles pot product and the sales and distribution of the Soba noodles and Cup Noodles ranges in the UK. The long standing relationship with Mondelez International was extended for a further five years during FY17/18 with an option to extend by a further three. A focus of capital investment in FY18/19 is set to increase Cadbury cake manufacturing capacity to satisfy growing demand.

“We are pleased to report revenue growth of +3.6%, our strongest performance for over five years,” says Gavin Darby, chief executive of Premier Foods. “Three important drivers of this performance were innovation, our International business and our strategic partnerships with Nissin and Mondelez International. International has been the star performer with sales growing +25%, and are almost double the level of three years ago, while the benefits from our Nissin and Mondelez International partnerships together contributed 55% of our revenue growth.”

He continues: “The Batchelors brand is now the fastest growing in our portfolio having been turned around from decline three years ago to double-digit growth for the past year. This followed the launch of new products designed to meet consumer trends such as Batchelors Super Noodles pots, which sold over 13 million pots in the past year.”

Premier Foods’ strategy is to drive profitable revenue growth and deliver cost efficiencies to generate cash. Premier Foods reduced net debt to less than £500 million during the year and the group is now targeting a net debt to EBITDA ratio below 3.0x – its initial target level – by March 2020.