Shares in newly floated Princes Group have experienced a volatile day of trading as the tinned fish and juices supplier posted a trading update to the London Stock Exchange.
Revenues in the nine months to 30 September declined year on year by 5.7% to £1.4bn on the back of lower average selling prices.
Princes said deflationary pricing conditions across several core raw materials hurt sales, given “the group’s pass-through mechanics with customers”.
The Liverpool-headquartered group, which made its debut in London last month following an IPO, added it continued to “execute its strategy focusing on margin-accretive growth, operational efficiency and disciplined portfolio management”.
EBITDA at Princes soared 51.5% in the period to £111.1m as margins expanded from 4.9% a year ago to 7.8%.
Princes’ share price jumped by about 5% as markets opened today but ended trading 0.9% behind at 441p, after having been down as much as 2.4% in the afternoon.
It means the stock, which was valued at the bottom of its IPO range at £1.16bn, is now 7.2% below the level of the 475p float price.
“This has been a milestone period for Princes, with our admission to trading on the London Stock Exchange,” said CEO Simon Harrison.
“We have taken decisive actions to enhance earnings quality, improve efficiency and strengthen our commercial partnerships. We are building a resilient, margin-accretive and customer-led business with a clear path for sustained growth. Our M&A and integration capability set along with the firepower we now have as a group is creating exciting opportunities to pursue value-accretive M&A, in line with our stated strategy.”
Princes is aiming to add another £1.5bn to its annual revenues through acquiring businesses using a £400m IPO war chest.
AJ Bell investment director Russ Mould said investors had struggled to evaluate the business given “limited information” in the trading update, resulting in the shares yo-yoing.
“Princes’ IPO had all the appeal of a tin can stuck at the back of a cupboard – not very exciting but still a potential source of sustenance for those willing to be brave,” he added.
“The lacklustre investor demand for its stock offer saw the shares priced at the bottom of the IPO range and fall further once they hit the market. It wasn’t a great start to life as a listed entity, so it was inevitable that management would have to work harder to bang the drum and convince more people that the business is worth a look.
“A lot of investors will be sitting on the sidelines until there is a full set of financial results by which to judge the company post-listing. Princes will have to let its business performance do the talking rather than management if it is to truly win over the market.”
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