Premier Foods saw sales edge back from elevated levels last year in its third quarter, but has upgraded its earnings expectations on continued strong trading so far in its financial year.
The Mr Kipling maker said it had delivered strong and branded growth in the 13 weeks to 1 January across both its grocery and sweet treats businesses in the quarter, with sales up 11.3% on a two year basis, albeit down 1.8% on a year-on-year basis.
Premier said the company outperformed in all its categories, 3.5% ahead of the market overall and gaining 90 basis points of value share in the period compared to last year.
On a year to date basis, Group sales grew by 7.3% and branded sales increased by 11.4% versus pre-Covid levels.
In its grocery business, a number of brands grew in double digit sales terms versus two years ago, as branded revenue increased by 11.2%. In particular, further sales growth in Bisto was driven by strong execution instore and consumers trading up to premium Bisto Best gravy for Christmas.
Sharwood’s also grew strongly across its wide portfolio, due to continued growth of healthier ranges, while Nissin noodles saw revenues in the quarter up over 150% compared to two years ago.
Sweet Treats delivered top line branded growth of 11.6% compared to two years ago, with both Mr Kipling and Cadbury cake contributing to this strong performance. Cadbury cake grew sales across its range of existing and new product ranges, the latter driven by Fudge and Crunchie cake bars.
Online sales grew ahead of the market, with sales up over 90% in the quarter versus two years ago and gaining 240 basis points of share.
Non-branded sales were lower in both the grocery and sweet treats businesses (down 3.2% and 14.3% respectively on a two-year basis), due to lower foodservice and out of home sales in grocery and the strategic decision to exit lower margin contracts in Sweet Treats.
Overseas, sales in the quarter grew by 33% compared to two years ago, thanks to progress in all the Group’s strategic international markets; Ireland, Australia, USA and Europe.
Premier said that following the delivery of three strong quarters of trading, and taking good momentum into the final quarter, trading profit for the full financial year is now expected to be at least £145m and adjusted profit before tax at least £125m (up from £141m and £119m respectively).
It said the group sees further opportunity for value creation through the execution of its five point strategy, which encompasses continuing to grow the core UK business using its branded growth model, investing in its supply chain infrastructure to increase productivity and efficiency, expanding into new categories in the UK, building international businesses with critical mass, and modest bolt on acquisitions to broaden the existing portfolio.
CEO Alex Whitehouse commented: “The strong momentum from the first half of the year continued into the key Q3 trading period, with our brands growing by 11.3% compared to two years ago. This was well ahead of the market across all our categories and resulted in very encouraging share gains.
“This performance continues to underline the popularity of our brands but also demonstrates the strength of our established branded growth model, with many of our brands supported by advertising campaigns and new product innovation during the quarter.”
“With three strong quarters of trading now delivered and taking good momentum into the final quarter, we are increasing our profit expectations for this financial year.”
Premier shares are up 5.8% this morning to 116.4p.
Deliveroo has posted what it hailed as a “strong performance to end 2021”, with sales slowing in its fourth quarter but full year revenues at the top end of prior guidance.
In the three months to 31 December, gross transaction value was £1.73bn, a year-on-year increase of 33% in reported currency and 36% in constant currency, against a 2020 comparison base that included lockdown restrictions in many markets.
It said growth in monthly active consumers and orders continued to be healthy, up 37% and 42% year-on-year, respectively.
GTV per order was down 5% year-on-year in constant currency to £21.4, with average order values continuing to revert towards pre-COVID levels.
On a full-year basis, gross transaction value increased to £6.73bn on a reported basis, including results from Spain until operations ended in November 2021.
That represented GTV growth of 70% year-on-year in constant currency – the top end of previously-upgraded guidance for 60-70% growth.
Taking a two-year view orders in Q4 2021 increased by 154% over the same quarter in 2019, compared to the average two-year growth rate of 174% achieved in Q1 to Q3 2021.
In UKI, GTV growth was 36% in constant currency, below order growth of 41% due to a decrease in average order value.
International GTV growth was 36% in constant currency, which was also below order growth of 43% due to a decrease in average order value.
Full year guidance for gross profit margin was maintained at previous guidance range of 7.5-7.75%.
Will Shu, Founder and CEO of Deliveroo, said: “We finished 2021 with a strong Q4 performance, and our full year GTV growth of 70% in constant currency was at the top end of the previously-upgraded guidance we provided.
“I’d like to thank the Deliveroo team, our restaurant and grocery partners and our riders for their focus and commitment in what has been another extraordinary year. Since the business was founded in 2013, Deliveroo’s focus has always been to deliver great experiences to our consumers, help our partners to grow, and provide further opportunities for riders.
“I am proud of what we achieved in 2021; despite a challenging backdrop, we continued to strengthen our customer proposition, widen our customer base and execute against our strategy. We are excited about the opportunity ahead and look forward to making further progress in 2022.”
Associated British Foods has posted a 19% constant currency jump in sales for the 16 weeks ended 8 January 2022 as Primark bounced back from a Covid-hit 2020.
Retail sales were 36% ahead of last year at constant currency with an operating profit margin ahead of expectations.
All of its stores are trading and remained open throughout the period, except for short periods in Austria and the Netherlands, albeit the improving trend in customer footfall was interrupted in December by the rapid rise in COVID-19 cases of the Omicron variant.
ABF said it is now seeing a recovery in UK and Ireland footfall again following this period.
Grocery, Sugar, Agriculture and Ingredients revenues in aggregate were 6% ahead of last year at constant currency.
Grocery sales were 2% ahead of last year, although it warned its businesses have experienced high levels of input cost inflation and margins were reduced in the quarter due to the phasing of the implementation of mitigating pricing actions.
Twinings Ovaltine “performed well”, with strong Ovaltine revenue growth with higher volumes in emerging markets. Twinings revenue growth was driven by the growth and new product launches in Wellbeing teas which offset a reduction in some retail sales from the high COVID-19 affected volumes last year.
AB Sugar revenue was 12% ahead of last year, with operating profit ahead of last year. The revenue increase was driven by stronger European sugar prices, higher Illovo domestic sales and improved pricing for bioethanol produced by British Sugar at Wissington.
Overall, ABF warned that its Grocery, Sugar, Ingredients and Agriculture businesses have seen an escalation in the cost of energy, logistics and commodities.
“We have been implementing plans to offset these through operational cost savings and, where necessary, the implementation of price increases,” it stated.
“We expect an increase in the adjusted operating profit for Sugar. We expect reduced adjusted operating profit margins in Grocery and Ingredients at the half year, due to phasing in fully recovering cost but a recovery in the run rate of these margins by the financial year end.”
However, the stronger profitability of Primark, and the consequent change in the weight of profit by tax jurisdiction for the group will result in a decrease in the group’s effective tax rate for the year to closer to pre-COVID levels,
Taking these factors into account, ABF’s outlook for the group is unchanged, with the company pointing to significant progress, at both the half and full year, in adjusted operating profit and adjusted earnings per share for the group.
On the markets this morning, the FTSE 100 has edged down 0.1% to open at 7,582.2pts.
Early risers, other than Premier Foods, include Deliveroo, up 3.9% to 176.2p, WH Smith, up 2.2% to 1,699.5p and Unilever, up 1.6% to 3,734.3p.
Fallers included Naked Wines, down 5.1% to 564p, McColl’s Retail Group, down 3.9% to 10p and THG, down 2.8% to 152.6p.
Yesterday in the City
The FTSE 100 closed up 0.4% at 7,589.6pts yesterday.
WH Smith was up 7.1% to 1,662.5p after group revenue at the retailer in the 20 weeks to 15 January came in at 85% of 2019 levels.
Unilever jumped 4.5% to 3,675.5p after late in the day it pulled the plug on its pursuit of GSK’s consumer health arm.
Other risers included Devro, up 3.5% to 209p, Pets at Home, up 2.2% to 417.8p, Marks & Spencer, up 2.1% to 226.7p, Nichols, up 1.5% to 1,370p, Science in Sport, up 1.5% to 69.5p and C&C Group, up 1.4% to 242.2p.
The day’s fallers included THG, down 6.4% to 157p, Glanbia, down 4.1% to €12.04, Sainsbury’s, down 2.5% to 291.3p, Naked Wines, down 2.1% to 594p, Hilton Food Group, down 2% to 1,108p and Coca-Cola Europacific Partners, down 1.8% to €51.25.