Shares in Premier Foods have soared this morning after the Bisto and Mr Kipling owner issued a surprise profits upgrade.
The group said, in a short unscheduled trading update, that it had continued to trade “strongly” in recent weeks, building on the momentum of the third quarter.
Premier now expected revenue growth of at least 10% year on year in the fourth quarter ending 1 April 2023.
It added the performance was mostly driven by its branded grocery business, with “broad-based” growth and further market share gains, but it noted the sweet treats division also demonstrated “an improving trend”.
International was also expected to deliver another quarter of strong sales growth.
As a result, trading profits and adjusted pre-tax profits were forecast to be ahead of the board’s initial expectations, coming in at about £155m and £135m respectively, representing year-on-year growth of 10%.
Net debt is also expected to be in line with last year.
Shares surged 9.9% higher in early trading to 126.4p as a result, taking the stock 15.5% higher in the year to date.
Analysts at Peel Hunt said the performance was “encouraging” and “notable” for coming three weeks ahead of the financial year end. “This gives increased confidence in the longer-term performance,” the broker added.
Shore Capital said Premier was “a high-quality business that is structurally undervalued”.
AJ Bell investment director Russ Mould said: “Mr Kipling cakes maker Premier Foods continues to have an exceedingly good time with trading.
“The company has shown recent success wasn’t simply down to people being stuck indoors during the pandemic and feasting on sweet treats. Instead, the company is enjoying the benefits of sorting out of its debt problems and being able to reinvest spare cash back into the business to make it more competitive and innovative.”
Jefferies added that strong momentum appeared to be continuing, with “a strong inference that Premier has concluded successfully its calendar year 2023 pricing negotiations”.
Last month, The Grocer reported that hundreds of Premier’s brands had jumped in price in recent weeks, with some lines up as much as 59%.
It followed strong trading over Christmas and the third quarter for the group, with sales up 12% in the 13 weeks to 31 December.
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