The share price of Premier Foods (LSE: PFD) is currently up over 10%, following the release of half-year results for 2013 that demonstrate “continued strong momentum against its strategies”.
The company reported that underlying business trading profit was up 50% to £47.4m, on underlying sales that were actually down almost 1%, at £621.2m.
Its grocery division filed total sales that were down 1%, at £380.6m, but lower sales in homebaking, Cadbury cake and Homepride cooking sauces, and an 18.5% drop in non-branded sales (due to contract withdrawals in desserts and powdered beverages), were offset by a 4% increase in sales of its grocery “power brands” — which include Sharwood’s, Ambrosia and Oxo — which were up to £253.2m.
Branded bread sales rose nearly 2%, to £185.2m, but non-branded sales dropped over 8%, to £55.4m, dragging total bread sales down 0.7% to £240.6m But a 33% increase in milling sales helped increase total sales in the bread division by 8.2%, to just shy of £356m.
Commenting on this morning’s results, Gavin Darby, Premier Food’s CEO, said:
“A 50% increase in Trading profit is a very encouraging result given the highly competitive environment. This shows that our turnaround strategy is delivering at the bottom line. We have now grown sales in our Grocery Power Brands for six consecutive quarters as we continue to build partnerships with our customers, deepen our understanding of consumers and invest more effectively in supporting our brands.
“The second half will see further plans to grow our Power Brands, in addition to a new £10m of cost savings that we have now identified from our efforts to reduce complexity. As a result, we now expect Full Year Trading Profit to be around the top of market expectations.
“Looking further forward, we will continue to drive profitable top-line growth by focusing on growing our categories supported by ongoing cost savings from reducing complexity. At the right time, we will address our capital structure – from a position of growing strength given the delivery of our turnaround plan and the performance of our Power Brands. I am excited by the potential offered by Premier Foods in the longer term.”
Prior to today’s results, Permier Food’s share price had slumped some 30% so far this year, so this morning’s good news has certainly provided a welcome fillip. That said, Permier Food’s share price remains around 60% down on two years ago, and a painful 90% down on this time in 2008.
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> Jon doesn’t own shares in Premier Foods.
