The share price of Premier Foods (LSE: PFD) is currently down over 7%, following a trading update, in which the company said that when it presents its half-year results for the six months to 30 June 2014 (due on Tuesday 22 July) sales of its “Power Brands” — which include Ambrosia, Bisto, Mr Kipling and Sharwoods — are “anticipated to be negative and below the Company’s expectations due to subdued grocery markets“. It also revised its previous guidance, saying that it no longer expects Power Brands sales to have grown by 2-3% by the end of this year.
In the rest of this morning’s announcement, the company said that it’s agreed to a stand-alone joint venture with Specialty Powders Holdings Limited to manufacture powdered beverages and desserts at Premier Food’s factory at Knighton, in Staffordshire.
Specialty Powders will have a 51% controlling stake in the joint venture — to be called Knighton Foods — and it will be led by Mike Kirby, current majority shareholder and group managing director of Specialty Powders. All 200 employees currently at the Knighton site are expected to transfer to the joint venture.
Commenting on the joint venture agreement, Premier Foods CEO Gavin Darby said:
“This innovative agreement will help to improve the efficiency of Premier’s Grocery infrastructure and, at the same time, allows us to benefit from a dedicated team with expertise that can support our powdered beverages and desserts business. I’m delighted that, in Specialty Powders, we’ve found a highly successful, entrepreneurial partner who is committed to growing the combined business. This is a very positive development both for Premier Foods and for our employees at Knighton.“
Following this morning’s drop, Premier Food’s share price now stands at 53.3p — that’s a fall of 57% so far this year, compared to a 0.6% rise in the FTSE 100. And the story gets worse over five years — whilst the FTSE 100 has increased by 53%, Premier Food’s share price has plummeted 88%.
