premier foods shopper

Source: Premier Foods

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Squeezed shoppers have turned to Premier Foods’ stable of household brands as they cut down on eating out, boosting sales and profits at the supplier group.

Revenues in the six months to 1 October increased 6.2% to £418.6m, with “particularly strong” year-on-year growth for Batchelors, Loyd Grossman, Sharwood’s, Homepride and Nissin.

CEO Alex Whitehouse said Premier’s “broad range of affordable brands” had always played a key role for families when times were tough.

“With people starting to eat out less, they often find the best restaurant in town is at home, where you can make nutritious and tasty meals more affordably,” he added.

Trading profits at the group also jumped 6.2% in the half to £56.7m thanks to the improved performance, with Premier also benefiting from cost-cutting and higher prices.

Adjusted pre-tax profits rose 11.9% to £47m as the group benefited from significantly lower interest costs following the refinancing announced in May 2021.

“We have again made very good financial and strategic progress in the first half of this year, reporting strong group and branded revenue growth in what continues to be a challenging environment,” Whitehouse said.

Branded revenue increased 3.9% in the half to £358.3m, while non-branded rose 22.8% to £60.3m, which the group attributed to strong pricing benefits, the recovery of out-of-home business-to-business volumes and contract wins.

In the grocery division, branded sales rose 4.6% to £256.1m thanks to the performance of Batchelors, Loyd Grossman, Sharwood’s, Homepride and Nissin, including NPD for pasta bakes, East Asian and pasta sauces.

It also saw sales from products launched in new categories, such as ice creams, ready-to-eat Ambrosia porridge and other extensions of Mr Kipling and Angel Delight, more than double.

Within sweet treats, branded sales increased 2.1% to £102.2m as non-HFSS Mr Kipling products received “a very strong response” from consumers.

Internationally, Premier boosted revenues by 11%, with growth broad based across the group’s target markets of Australia, Canada, Europe, Ireland and the US.

Whitehouse said: “We continue to see further input cost inflation, which we expect to recover through a combination of cost savings and our annual price increase in quarter four this year. Following a strong first half and with good momentum as we enter H2, we are on track to deliver on expectations for FY22/23.”

Shares in the group dipped 0.5% to 110.4p as markets opened this morning.

Morning update

Food prices have recorded their biggest rise in 45 years, pushing up the UK’s inflation rate to 11.1% in the year to October, up from 10.1%.

Food and non-alcoholic beverage prices rose by 16.2% last month, up from 14.5% in September 2022, according to the Office for National Statistics (ONS).

It’s the fastest jump since September 1977, with the largest contribution coming from milk, cheese and eggs.

Despite the soaring price of food, the biggest driver of the overall rate of inflation was from spiralling energy costs as the new price cap came into effect.

Inflation would have hit 13.8% without the energy price guarantee introduced by former PM Liz Truss.

ONS chief economist Grant Fitzner said over the past year, gas prices had climbed nearly 130% while electricity had risen by around 66%.

It was partially offset by motor fuels, where average petrol prices fell 0.5%, but were still around 18% more expensive than they were a year ago.

Average petrol and diesel prices stood at 163.6p and 183.9p per litre, respectively, in October 2022, compared with 138.6p and 142.2p per litre a year earlier.

Deliveroo has pulled out of Australia after struggling to scale up its operations in the country profitably.

The firm said in a statement this morning it was placing the Australian subsidiary into voluntary administration and would permanently cease trading.

Chief operating officer Eric French said: “This was a difficult decision and not one we have taken lightly.

“We want to thank all our employees, consumers, riders and restaurant and grocery partners who have been involved with the Australian operations over the past seven years.

“Our focus is now on making sure our employees, riders and partners are supported throughout this process.”

Embattled own-label household products manufacturer McBride has warned of continued pressure on costs but said its trading was in line with expectations.

It added in the update ahead of an AGAM that it was making “solid progress” with its strategic initiatives and had “significantly improved” customer service levels.

For the first four months of the year, revenues were 29% higher than the previous year as it won new contracts and private label’s market share increased.

McBride added that most of its raw material costs were steadying but warned input costs for certain items had continued to climb to all-time highs.

“Supplies of certain raw material and packaging items remain tight and additionally energy concerns as we head into the winter are driving input prices further upwards and production of certain key materials downwards,” the group said.

“Consequently, the group is continuing to seek mitigations with customers either through further price increases or product engineering with the size of the required margin recovery widely varying between product families.”

Grocery tech firm Eagle Eye Solutions has agreed to acquire France-based Untie Nots and its subsidiaries in a deal worth up to €39m.

The personalised promotions business provided retailers with AI-powered promotion and gamification SaaS software solutions.

It works with the likes of Carrefour, E Leclerc, Auchan and other blue-chip retailers in Europe and the US.

Eagle Eye said that Untie Nots’ strong reach in France and growing footprint in Europe and the US would expand its geographic reach and bring additional blue-chip customers into the group.

The initial consideration for the acquisition is €15m, with further performance-linked earn-outs payable of up to €23.8m.

Eagle Eye also announced a placing of £7m at a price of 555p per share to part-fund the deal.

CEO Tim Mason said: “The acquisition of Untie Nots will provide us with accelerated entry into the French digital promotions market, bring some of Europe’s largest grocers into the group and add to our growing roster of US clients, providing a wealth of cross-sale opportunities.”

The FTSE 100 is up 0.2% to 7,382.41pts this morning.

Deliveroo shares have plunged 3% to 96.6p, McBride sank 6.4% to 23.4p and Eagle Eye is down 1.3% to 570p.

Early risers in fmcg included Glanbia, up 3% to €11.15, Haleon, up 2.8% 287p, and Coca-Cola HBC, up 1.5% to 2,039p.

Yesterday in the City

The FTSE 100 dipped 0.3% to 7,363.48pts as unemployment in the UK rose and insolvencies climbed.

After spending much of the day up on the previous day, shares in Imperial Brands closed down 0.8% to 2,022p. The tobacco giant suffered a hit to full-year profits due to it exiting Russia but upped its dividend.

Ocado crashed 16.3% to 776.3p as investors took a profit from a recent share rally at the business.

Other fallers included HelloFresh, down 5.7% to €26.64, Science in Sport, down 4.9% to 14.5p, and Just Eat Takeaway, down 4.7% to 1,974p.

Virgin Wines UK, Compass Group and Kerry Group were part of a handful of fmcg risers, up 4.2% to 71.4p, 0.8% to 1,837p and 3.5% to €94.16.