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RNS Number : 2665P
Premier Foods plc
23 October 2012
23 October 2012
Premier Foods plc
Interim Management Statement for the three months ending
30 September 2012
Third Successive Quarter of Grocery Power Brands Sales
Growth
Premier Foods today reports the Group's Interim Management
Statement for the three months ending 30 September 2012.
Highlights
-- Underlying sales excluding Milling(1,3) up 2.0% in Q3
-- Power Brand sales up 2.0% YTD
-- Grocery Power Brands sales up 4.1% YTD
-- Additional Overhead Cost Reductions of GBP20m to be achieved in 2013
-- Full Year expectations remain unchanged
Michael Clarke, Chief Executive Officer said:
"I'm delighted that we've grown sales of our Grocery Power
Brands for a third successive quarter despite the challenging
consumer environment. This underlines the substantial progress we
have made this year in stabilising the business and delivering
against our strategic priorities. Following recent divestitures we
expect to deliver a further GBP20 million of overhead cost
reductions in 2013, over and above the GBP40 million of savings we
will deliver in 2012.
"We intend to build on this progress as we continue to drive
momentum behind our Grocery Power Brands particularly through
capturing opportunities in the growing convenient meals and
snacking segments. We are also continuing our work to unlock the
value in our Bread business, through taking the necessary decisions
to improve sustainable profitability. We have a solid programme in
place for the important Christmas trading period and our Full Year
expectations are unchanged."
Introduction
Underlying sales for the three months to 30 September 2012
increased by 2.0% compared to the prior year with another good
performance from the Company's Power Brands, continuing the
momentum seen in the first half of the year.
Total branded sales increased by 0.2% to GBP289.0m in the third
quarter, also in line with the trend seen in the first half of the
year, reflecting the performance of the Power Brands, offset by
lower sales of our support brands. Non-branded sales grew by 9.7%
in the quarter, reflecting contract gains in Cake and pricing
benefits. The Company's branded sales mix was approximately 80% in
the quarter.
Quarter 3 Sales performance(1,2,3)
GBPm 2012 Q3 2011 Q3 Change
Power Brands 206.1 202.0 2.0%
Support brands 82.9 86.4 (4.1%)
-------- -------- -------
Total branded 289.0 288.4 0.2%
Non-branded 75.7 69.0 9.7%
-------- -------- -------
Total sales (ex.
Milling) 364.7 357.4 2.0%
-------- -------- -------
Quarter 3 Year to date Sales performance(1,2,3)
GBPm 2012 2011 Change
Q3 YTD Q3 YTD
Power Brands 625.0 612.6 2.0%
Support brands 257.0 265.6 (3.2%)
-------- -------- -------
Total branded 882.0 878.2 0.4%
Non-branded 226.7 214.2 5.8%
-------- -------- -------
Total sales (ex Milling) 1,108.7 1,092.4 1.5%
-------- -------- -------
Grocery
Grocery Power Brands delivered year on year sales growth of 4.1%
in the nine months to 30 September, a strong performance reflecting
improved customer collaboration, consumer marketing investment and
new product innovation.
Ambrosia delivered increased sales in the quarter, driven by the
new rice pots range while Oxo sales increased significantly
reflecting improved customer collaboration. Batchelors' continued
its strong performance into the third quarter, supported by the new
Deli-Box range and the successful 'Fuelling Britain' campaign.
During the quarter, the consumer and trading environment remained
challenging with continued high levels of promotional activity in
the market.
The quarter was characterised by a quieter period of consumer
marketing investment (during the Olympics) compared to the first
half of the year. However, the final quarter will see a return to
increased levels of marketing activity. This will include a
particular focus on Batchelors' and Bisto, the latter to support
the recent launch of Bisto 'Stock Melts'.
Bread
Sales and market share of Hovis bread increased during the
quarter, in a category which continues to be highly competitive.
Marketing investment continued, with further advertising support of
the new Hovis Farmer's Loaf.
In both the Milling and Baking parts of the Bread business, the
Company was successful in the quarter in delivering price increases
across its customer base to offset wheat price inflation.
However, supply chain efficiencies were impacted by a lower
quality UK wheat harvest and higher net costs to serve. In light of
the recent harvest, the Company continues to review its wheat
procurement strategies to ensure it maintains optimum quality
across its product range, particularly for Hovis.
Following a recent business review, and consistent with its
approach to improving sustainable profitability in Bread, the
Company will be unable to renew a Bread contract it holds with a
retail customer with effect from mid 2013. This contract loss
accounts for approximately GBP75m annual sales, has very low
margins, is costly to service and will not affect 2012
performance.
As previously announced, the Company is examining a range of
options to unlock the future value of the Bread business and
address the challenges facing the category.
Cost Reduction & Restructuring Programme
Following recent divestitures, the Company expects to deliver
additional overhead cost reductions of GBP20m in 2013, over and
above the GBP40 million of savings to be delivered in 2012.
Financial Position
The financial position of the Company remains unchanged since
the publication of the Half Year results. Disposal proceeds of
around GBP275m are currently expected to be received during the
second half of the year. This will represent a 22% reduction in Net
debt from the Half Year position of GBP1,269.4 million.
Outlook
The Company has made substantial progress in stabilising and
cleaning up the business and delivering against its growth
strategies. While the economic, trading and consumer environment
remains challenging, the Company's full year expectations remain
unchanged.
Ends
For further information, please contact:
Institutional investors and analysts:
Mark Moran, Chief Financial Officer +44 (0) 1727 815 850
Richard Godden, Head of Investor Relations +44 (0) 1727 815 850
Media enquiries:
Lisa Attenborough, Director of Communications +44 (0) 1727 815 850
Maitland +44 (0) 20 7379 5151
Tom Buchanan
Brian Hudspith
Conference Call
A conference call for investors and analysts will take place on
23 October 2012 at 8:30am, details of which are outlined below. A
replay of the conference call will be available on the Group's
website, www.premierfoods.co.uk.
Telephone number: 0808 109 0700 (UK toll free)
+44 20 3003 2666 (Standard international access)
Notes to editors:
1. The results of the Group exclude results of the following
disposed businesses: Meat-free, Canned grocery, Brookes Avana,
Irish Brands, Vinegar & Sour Pickles and Elephant Atta Ethnic
flour.
2. All sales data for Premier Foods is for the period to 30
September 2012 or 30 September 2011 as appropriate.
3. All sales are stated on an 'Underlying business' basis and
exclude Milling, commercial adjustments and a non-core contract
loss, as described in the Company's 2012 Half Year results.
Certain statements in this Interim Management Statement are
forward looking statements. By their nature, forward looking
statements involve a number of risks, uncertainties or assumptions
that could cause actual results or events to differ materially from
those expressed or implied by those statements. Forward looking
statements regarding past trends or activities should not be taken
as representation that such trends or activities will continue in
the future. Accordingly, undue reliance should not be placed on
forward looking statements.
A Premier Foods image gallery is available using the following
link:
www.premierfoods.co.uk/media/image-gallery/
As Britain's largest food producer, Premier Foods is committed
to being 'The Best in British Food' - delivering the taste the
British love, with food that's made in Britain by people who
understand British consumers. We supply a range of retail,
wholesale, foodservice and other customers with some of Britain's
best loved brands, including Ambrosia, Batchelors, Bisto, Hovis,
Loyd Grossman, Mr. Kipling, Oxo and Sharwood's . The company
employs around 10,000 people operating from over 40 sites from
Plymouth to Glasgow.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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