Premier Foods’ share price soars, announces first dividend for 13 years

The Premier Foods share price has sailed to four-month highs! Here’s why the FTSE 250 food share has rocketed in Wednesday business.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image of person checking their shares portfolio on mobile phone and computer

Image source: Getty Images.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Stock prices on the FTSE 250 are (broadly speaking) still struggling for traction on Wednesday. The UK’s second-tier share index was recently 0.5% lower on the day as concerns over runaway inflation roll on. However, the Premier Foods (LSE: PFD) share price isn’t having any problems gaining traction.

Prices of the food manufacturer have soared to 108.28p per share at one point in midweek business. This was the most expensive level for four months. It’s since settled back, but at 106.2p, the Premier Foods share price remains 4% higher from Tuesday’s close.

Premier Foods has soared after announcing it’ll be paying its first dividend for 13 years.

Profits soar at Premier Foods

In bubbly full-year results, the food producer — which makes everything from Mr Kipling cakes and Ambrosia custard to Sharwoods Indian cooking sauces — said that group revenues soared 10.3% in the 53 weeks to 3 April, to £947m. Sales of its branded products, meanwhile, grew by an impressive 13.6%.

Premier Foods said it gained more customers during the last financial year “as a result of more people cooking from home, experimenting with new recipes and expanding their repertoire of meals.” It said too, demand for its edible goods continued to grow ahead of the broader market. The company’s market share rose by 70 basis points year-on-year.

Premier Foods said it enjoyed “a prolonged period of elevated demand for its product ranges” as Covid-19 lockdowns forced people to eat all of their meals from home. It managed to keep product availability high due to the “robustness” of its supply chain, it noted. And a combination of brand investment and new product launches allowed it to gain market share in the period, it added.

Dividends return

Soaring sales at Premier Foods saw adjusted pre-tax profit increase 23.5% year-on-year, to £117.9m. Meanwhile, net debt at the business dropped to £332.7m, from £429.6m in financial 2020.  And the company’s net debt to EBITDA ratio plummeted to 1.9, from 2.7 previously, the lowest level on record.

Premier Foods says that it has “made significant progress in delivering against its branded growth model strategy in recent years,” a drive which has pushed net debt to levels that would dividend payments to resume. Consequently the UK food share said it will pay a 1p per share dividend for fiscal 2021. This is the first shareholder payout since 2008.

A bright outlook

Looking ahead, Premier Foods said it has entered the new financial year “in a strong position.” The FTSE 250 firm paid tribute to its larger consumer base, upcoming new product launches, and television advertising among some of its largest brands in the coming months, as reasons to be optimistic.

Premier Foods has begun fiscal 2022 in line with expectations, it said. And it added that “[we] will look to expand through accessing new categories in the UK and also in selected overseas markets, while exploring bolt-on acquisition opportunities.”

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

How I’d invest my first £20k ISA to target £4,900 a year from dividend shares

Looking for dividend shares in a new Stocks and Shares ISA, and want diversification too? Here's how I'd go about…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »