Premier Foods earnings rise in first half amid Sweet Treats growth

(Alliance News) - Premier Foods PLC on Thursday reported increased earnings for the first half of the financial year, and said it expects branded revenue growth to build in the second half.

St Albans, Hertfordshire-based Premier Foods is a maker of branded and non-branded food, including Mr Kipling cakes and Oxo stock cubes.

Revenue edged up 0.2% to GBP502.1 million in the 26 weeks to September 27 from GBP501.0 million a year ago.

Pretax profit increased 19% to GBP63.4 million from GBP53.5 million, as selling, marketing and distribution costs fell 4.4% to GBP73.8 million from GBP77.2 million while administrative costs dropped 15% to GBP33.6 million from GBP39.6 million.

Basic earnings per share rose 17% to 5.4 pence from 4.6p.

Headline revenue, which excludes the effect of the Charnwood site closure in last year's figures, was up 0.7% to GBP502.5 million from GBP498.7 million.

Headline branded revenue grew 1.9% to GBP453.0 million from GBP444.7 million.

Adjusted pretax profit climbed 2.2% to GBP62.4 million from GBP61.0 million.

Looking ahead, Premier Foods said it expects branded revenue growth to build in the second half, as further new product development comes to market with "increased market investment".

The firm said it remains on track to deliver on trading profit expectations for the full-year.

Adjusted pretax profit is now expected to be "slightly higher" this year due to lower interest costs. In the medium-term, Premier Foods said it expects to continue to deliver "strong progress" against its growth strategy.

"We've continued to make strong progress across all our strategic pillars in the first half of the year. In quarter two, our UK branded revenue stepped up, growing by 3.0%, led by another very strong Sweet Treats performance, of 7.4%, together with a strengthened UK Grocery performance," said Chief Executive Officer Alex Whitehouse.

The company said growth in the Sweet Treats arm reflects the strength of its innovation programme, with "notable performances" from Mr Kipling Breakfast Bakes, Cadbury Caramel Mini Rolls and Mr Kipling cake bite tubs.

"Looking forward to the remainder of the year, we expect branded revenue growth to build, supported by both a particularly exciting product innovation programme and increased second half marketing investment across a broader range of digital communication platforms... We'll be driving benefits from the Merchant Gourmet acquisition and integration, and we continue to explore additional inorganic opportunities which fit our M&A criteria."

The company said it expects to pay a progressive dividend, growing ahead of earnings.

Shares in Premier Foods were up 0.5% at 173.80p on Thursday morning in London.

By Michael Hennessey, Alliance News reporter

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