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* Says volumes spiked in March
* Fourth-quarter sales expected to be up about 3.6%
* Agrees segregated merger of its pensions schemes
* Shares up 22%
(Adds detail and background, updates shares)
By Tanishaa Nadkar
April 20 (Reuters) - Mr Kipling cakes maker Premier Foods
on Monday forecast annual trading profit at the top end
of market expectations after Britons stocked up on food at the
start of the coronavirus lockdown, lifting its shares more than
20%.
The company also ended a more than year-long business review
instigated after a failed 2016 takeover bid from U.S. food group
McCormick put it under pressure and led to the ousting
of former CEO Gavin Darby.
The British company reported a short-term peak in volumes in
March, sending its shares up 22% to 39.9 pence by 1315 GMT, on
track for their best day in more than four years.
The announcements bode well for Chief Executive Alex
Whitehouse, who took the helm last year and has been credited
with turning around Premier's UK business.
The maker of Bisto gravy and OXO cubes said that volumes
have started to reduce from the levels in March but are still
expected to exceed usual demand.
"This reflects more meals being eaten at home than usual due
to recent measures set out by HM Government and hence increased
demand for the group's product ranges," the company said.
Total grocery sales in the UK leapt more than a fifth to a
record 10.8 billion pounds ($13.4 billion) in the four weeks to
March 22 as Britons stocked up on everything from pasta to pet
food ahead of a nationwide lockdown to contain the coronavirus
outbreak.
Britain is not considering lifting its lockdown any time
soon.
Premier Foods' sales in its financial fourth-quarter to
March 28 are expected to have grown about 3.6% year on year,
with a 10.5% jump in March, it added.
The company also said it has agreed to a segregated merger
of its pensions schemes that would help to save 4 million pounds
annually from its 2020 financial year, adding that it is moving
closer to a scheme buyout by a specialist insurer.
Peel Hunt analysts said that Premier will now be in a
position to pay dividends.
The net value of pension deficit contributions could reduce
by about 45% to a range of 175 million pounds to 185 million
pounds, the company said.
"All these factors put Premier Foods in a better position
to start shaking off its reputation as a zombie company that
hasn't been able to invest much in its business," said AJ Bell
Investment Director Russ Mould.
($1 = 0.8035 pounds)
(Reporting by Tanishaa Nadkar and Pushkala Aripaka in Bengaluru
Editing by David Goodman)
