Premier Foods narrows losses after jump in global sales

(Press Association) Ambrosia custard and Bisto gravy maker Premier Foods has narrowed its losses after securing a hefty jump in sales from its international business.

The group has served up a half-year pre-tax loss of £1.2m for the six months ending in September, a significant drop from the £8.7m loss recorded for the same period last year.

Revenues also picked up by 1.5% to £353.3m, driven by a strong second quarter and a 23% jump in sales from its international operation.

Mr Kipling and Cadbury demand

Global growth came from strong demand for Mr Kipling and Cadbury in Australia, with the group eyeing a boost from a further expansion of Asian food brand Sharwood’s across the United States.

The group said it was on track to hit its annual financial targets for the year, and had seen net debt fall 4% to £535.3m.

Shares in the firm were up more than 6% in early morning trading on the London Stock Exchange, as investors cheered a brighter performance from the firm.

CEO statement

Chief executive Gavin Darby said: “We are pleased to report a return to revenue growth of 1.5% in the first half of the year.

“A key highlight was our strong performance in the second quarter, with volume driven revenue up 6.2% after a challenging first quarter. The cost efficiency programme we launched earlier this year is on track to deliver the expected benefits.

“We completed the issue of a new £210m high yield bond in June and our Net debt was £21m lower than the same point last year; a little ahead of our plans.”

Adjusted pre-tax profits rose to £26.4m for the six months ending in September, up from £26.3m for the period in 2016.

Cost inflation

Premier Foods, which became embroiled in a takeover tussle with US food giant McCormick last year, said more than 40% of revenue growth during the second quarter came from its partnerships with Japanese noodle-maker Nissin and Cadbury-owner Mondelez International.

It added that cost inflation, largely driven by the Brexit-hit pound, would continue to rise in the second half of the year, but at a lower rate.

Shore Capital analyst Clive Black said: “Premier Foods, the UK’s number four food manufacturer in size by sales, has had a colourful and somewhat varied history as a listed entity, delivering much disappointment over the last decade or so for its shareholders.

“Well, let the bunting be brought out of the fusty ‘better news bunting box’, because today there is little disappointment and, in fact, better news of Q2 FY2018 trading. It is genuinely pleasing not to be recording disappointment and more stress from Premier.

“In fact we are happy to pat management on the back for the trading performance in Q2, a performance that may help support the mood music around the shares today.”