Premier Foods (PFD) recorded full-year sales growth of 0.6% after a better than expected sales boost of 1.4% in the fourth quarter.
After rebuffing the takeover advances of US food group McCormick and instead signing a co-operation agreement with Japan’s Nissin Foods, Premier beat analysts’ expectations after a strong finish to the year.
Group sales for the 52 weeks ended 2 April 2016 were £771.7m, up 0.6% on the last year.
Underlying trading profit for the year was flat at £131m, but pre-tax profit was up 3.5% to £86.1m.
While branded sales were flat, six of the group’s eight largest brands delivered average sales growth of 3.4% during the year.
These six brands, Bisto, Oxo, Loyd Grossman, Sharwood’s, Mr Kipling and Cadbury cake, have received more focus on innovation and marketing investment over the last two years and “this result clearly demonstrates that the group’s innovation and brand marketing strategy is working,” Premier stated.
Ambrosia and Batchelors, the other two major brands, saw sales decline by 2.9%.
Its Sweet Treats division’s total sales increased by 3.4% in the full year and by 3.8% in the fourth quarter. Grocery sales of £548.6m were 0.6% behind the prior year as growth in non-branded sales was offset by a small decline in branded sales.
Premier spent an additional £3m more in consumer marketing last year compared to the previous year, with marketing spend rising to £36m.
Chief executive Gavin Darby said: “We are very pleased to report sales growth both in the year and the fourth quarter in what continues to be a deflationary market.
“We recently set out some additional strategic initiatives which we believe will further accelerate our growth and now expect to deliver sales growth of 2-4% in both FY16/17 and the medium term. The potential opportunities presented by our partnership with Nissin are also very exciting. The board is focused on delivering shareholder value and we see a strong future for Premier Foods with its leading category positions, great brands and strong operational cash flows.”
Net debt reduced to £534.2m from £584.9m during the year.
Morning update
A day that was billed as a showdown between angry investors and the Premier board has started well for the supplier, with its shares up 3% so far this morning to back above 40p at 40.4p.
Premier also announced this morning that Nissin Foods’ Tsunao Kijima will join the board as a non-executive director with effect from 21 July 2016 under the terms of its co-operation partnership with Nissin from 23 April 2016. Kijima is managing director of Nissin, with responsibility for the USA business. He has also had responsibility for Nissin’s corporate functions including strategy and M&A, business process optimisation, corporate infrastructure and innovation.
Elsewhere, Greencore (GNC) has issued its interim results for the half year to 25 March 2016, with revenues boosted by strong growth in convenience foods.
Overall group revenues of £691.6m were up 8.1% as reported and up 7.5% on a constant currency basis. Convenience Foods revenue were up 7.8% in constant currency to £667.9m, with UK and US food to go like for like revenue growth up 12.7%, which is “well ahead of market performance”.
Group operating profits were up 8.5% to £43.5m, while operating margin remained unchanged at 6.3%.
In the UK, the food to go business grew at 13.1% and the construction of its new manufacturing facility in Northampton was completed during the first half. Greencore also said good progress has also been made on the construction of the additional unit which is due to be commissioned in spring 2017.
The company said the bulk of start-up and commissioning costs will impact earnings in the first half of the 2017 financial year, there will also be some impact in the second half of 2016.
Greencore said it has separately decided to add several new production lines at its other UK sandwich facilities to ensure its ability to meet both growing demand and future new business wins.
CEO Patrick Coveney said: “Greencore has performed strongly in the first half of the year. Our strategy of focusing on the UK and US food to go markets is working well and we are continuing to invest in capacity and capability initiatives to support the substantial future growth pipeline. We are confident of further progress in the months and years ahead.”
Greencore shares are down 1.9% to 379.2p this morning despite the upbeat sales performance.
Elsewhere, the FTSE 100 is up a healthy 0.8% to 6,202.4pts this morning.
Strong early risers include Tesco (TSCO) carrying on from yesterday rising another 2.2% this morning to 170.4p, and Marks & Spencer (MKS), up 1.3% to 430.6p.
Outside the FTSE 100, strong performers include Poundland (PLND), up 2.5% to 170.7p, PZ Cussons (PZC), up 1.3% to 319.7p and Cranswick (CWK), up 1.2% to 2,375p.
Along with Greencore, early fallers include Conviviality (CVR), down 2.2% to 208.3p and Applegreen (APGN), down 1.4% to 350p.
Yesterday in the City
Despite some uncomfortable headlines about Tesco CEO Dave Lewis’ pay packet triggered by Friday’s annual report, Tesco was one of the FTSE 100’s biggest risers yesterday. The supermarket, which has seen its share price suppressed by downbeat commentary around its full-year results last month was up 3.1% yesterday back to 166.7p.
Elsewhere, it was a subdued day in the City, with the FTSE 100 edging down 0.3% to 6,120pts.
Sainsbury’s (SBRY) and Morrisons (MRW) both edged into the black, rising by 0.5% to 256.4p and 0.4% to 190.5p respectively, but there was little in the way of dramatic movement amongst the sectors biggest stocks.
The day’s biggest risers also included newsagent group McColl’s (MCLS), up 3.2% to 160p, Majestic Wine (WINE), up 2.2% to 444.5p and Conviviality (CVR), up 2.2% to 213p.
Fallers yesterday included Stock Spirits Group (STCK), down 2.4% to 162p and Finsbury Food Group (FIF), down 2.6% to 113.5p.
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