Shares in Premier Foods, the company at the centre of the biggest food recall scandal in history, have been virtually unscathed by the firestorm engulfing it.
While its shares fell 3% when the news broke on February 18,Premier has not been clobbered by the market, said Panmure Gordon analyst Justin Scarborough. “This will be the hot topic when Premier’s full-year results come out on March 2, but it does not appear it will have a hugely damaging impact.The share price reflects that.”
He added: “Premier has told the City that it does not believe there will be any material impact on profitability, as any liability will be passed back to the original supplier. If the supplier cannot meet the liability, then Premier believes it will still be covered by insurance.”
Premier would also benefit from the fact most shoppers did not associate it with the scandal, he said. “The main Premier brand affected that consumers would recognise is Crosse & Blackwell Worcester sauce, which accounted for something like £1m of sales out of group sales of £900m. This is not a significant part of the business.
“What is not clear is the long-term impact this will have on Premier’s reputation in the trade.”
St Albans-based Premier has remained studiously silent this week, only confirming it had received written assurances the powder did not contain Sudan 1, “based on [its] supplier’s internal testing procedures”. It is understood to have started a new 30-tonne brew of Worcester sauce.
While the Financial Services Authority will look into the timing of Premier’s announcement to the Stock Exchange, which came five days after its board was informed of the Sudan 1 problem, it is unlikely to issue a fine.
A source close to the regulator said: “Given that Premier’s share price has not been materially affected, I can’t see any action being taken.”