TIDMPFD TIDMIRSH
RNS Number : 0949A
Premier Foods plc
17 January 2020
17 January 2020
Premier Foods plc (the "Company" or the "Group")
Quarter 3 Trading Statement for 13 weeks ended 28 December 2019
Strong Q3 performance, profit expectations unchanged & full
year Net debt/EBITDA target of 3.0x on track
-- Q3 Group sales up +2.6% and up +2.5% Q3 year to date
-- Q3 UK sales up +3.6% and +3.3% Q3 year to date; 10(th) consecutive quarter of growth
-- Outperforming the market, with share gains in 7 out of 8 major brands(3)
-- Mr. Kipling sales up +10% in Q3
-- Non-branded sales returned to growth in Q3
-- Profit expectations for the full year remain unchanged
-- On track to meet target of 3.0x Net debt/EBITDA by March 2020
Alex Whitehouse, Chief Executive Officer
"Today we're reporting another strong quarter with Group sales
up +2.6% and UK sales up +3.6%. Our UK business has now delivered
10 consecutive quarters of revenue growth and has consistently
outperformed the market. Our biggest brand, Mr. Kipling, has again
been instrumental to this continuing momentum, with increased sales
of 10% supported by TV advertising and new product ranges. Our more
seasonally focused brands grew by over 5% in the quarter and in
2019 we sold over 200 million mince pies, 7% more than 2018."
"Our proven branded growth model of delivering new product
innovation based on consumer trends together with high quality
advertising behind our major brands continues to work very well. In
Q3 we doubled our UK marketing investment with more to come in Q4,
along with a number of new product launches including Cadbury Crème
Egg choc cakes and Mr. Kipling mini pies and tarts. We are making
good progress towards our cost savings goals and are on track to
deliver GBP5m savings over the next 2 years to further increase
investment into the branded growth model. This performance, in our
key trading period, reconfirms our unchanged profit expectations
for the full year and we remain on track to meet our Net
debt/EBITDA leverage target of 3.0x(5) by March 2020."
Sales % change Q3 Q3 Year to date
------------------------------- --------------------------------
Grocery Sweet Treats Group Grocery Sweet Treats Group
-------- ------------- -------- ------------- -------
Branded 0.5% 7.6% 2.3% 2.4% 6.3% 3.5%
Non-branded (0.8%) 8.8% 3.9% (0.4%) (4.2%) (1.8%)
-------- ------------- ------ -------- ------------- -------
Total 0.3% 8.0% 2.6% 1.9% 3.8% 2.5%
Trading update
===============
The Group reported sales growth of +2.6% in Q3 compared to the
prior year, particularly reflecting very good Sweet Treats sales
which increased +8.0%. Grocery sales grew by +0.3% in the quarter,
as a better UK performance was partly offset by weaker
International sales. The UK, which represents c.94% of the Group's
annual sales, saw revenues increase by +3.6% in Quarter 3 year on
year.
The Group continues to outperform its markets, with seven of its
largest eight brands growing market share on a year to date
basis.
In the Grocery business, Bisto and Ambrosia both grew sales in
the third quarter, reflecting advertising investment for Bisto and
continued share gains for Ambrosia. Sales of Paxo stuffing were
excellent in the run up to Christmas while Nissin Soba noodles and
Cup Noodle continued their very strong trajectory, growing revenues
by nearly 70% in the quarter. Non-branded sales declined by (0.8%)
in the third quarter as a result of decreased business to business
volumes.
In Sweet Treats, Mr. Kipling recorded an eighth consecutive
quarter of sales growth, with revenues up +10% as the benefits from
increased marketing investment and new product launches continue to
realise great progress for the Company's largest brand. Mr.Kipling
mince pies sales also grew by +10% in the quarter, supported by the
launch of its new mini Mr. Kipling mince pies. In total, the Group
sold over 200 million mince pies during the course of 2019; a 7%
volume increase on the prior year. Sales of Cadbury licensed
product ranges were ahead on a year to date basis, although
slightly tempered in December as lower promotional levels on cake
offset the launch of new Cadbury cake mixes.
As expected, Non-branded Sweet Treats sales returned to growth
in the quarter with sales up +8.8% compared to last year. This
reflected the lapping of softer comparatives associated with
impacts from the Group's logistics transformation programme a year
ago.
The International business delivered a disappointing result with
sales(4) (17%) lower in the third quarter. With new leadership now
in place, the Group is implementing a revised and more focused
approach in order to deliver more consistent sustainable growth,
building bigger businesses in selected markets. As it transitions
to this new approach, further progress is expected to be deferred
to the FY20/21 financial year.
In the final quarter of the year, Mr. Kipling will be launching
a range of mini pies and tarts including Cherry Bakewells and Fruit
Pies. Quarter 4 also sees the launch of Cadbury Crème Egg choc
cakes for Easter and Plantastic grain pots.
Cost & efficiency
==================
As previously announced, the Group is targeting a GBP5m cost
savings programme over the next two years, the proceeds of which
will primarily be used to reinvest in its brands. Very good
progress is already being made in achieving these savings with
further news to follow in due course.
Knighton Foods
===============
Following an internal review, the Group has decided to fully
integrate its Knighton Foods subsidiary into its core UK business.
This move is expected to generate a number of commercial
opportunities together with a range of operational synergies.
Strategic review update
========================
As previously announced, the Group's strategic review is nearing
conclusion and a further update is expected to be provided as
appropriate.
Pensions update
================
The triennial actuarial valuation of the Group's pension schemes
is continuing and dialogue with all Trustees remains ongoing; a
further update will be provided in due course.
Outlook
========
The Group has delivered a strong Q3, its key trading period, and
this reconfirms its confidence of delivering progress in FY19/20.
Its target of 3.0x Net debt/EBITDA is expected to be met by March
2020.
Ends
Further information
====================
Investors and analysts:
Duncan Leggett, Chief Financial Officer +44 (0) 1727 815 850
Richard Godden, Director of Investor Relations
& Treasury +44 (0) 1727 815 850
Media:
Maitland
Clinton Manning +44 (0) 20 7379 5151
Joanna Davidson +44 (0) 20 7379 5151
Conference call
================
A conference call for investors and analysts hosted by Alex
Whitehouse, CEO and Duncan Leggett, CFO, will take place today, 17
January 2020, at 9.00am, details of which are outlined below. A
replay of the conference call will be available on the Company's
website later in the day:
www.premierfoods.co.uk/investors/results-centre
Telephone number: 0800 376 7922 (UK toll free)
+44 20 7192 8000 (standard international access)
Conference ID: 3875666
Notes to editors:
1. All financial data detailed above is unaudited and has not
been subject to review by the Company's auditors.
2. All sales data relates to the 13 weeks to 28 December 2019 or
29 December 2018, the 'quarter' or the 'period', as appropriate.
Quarter 3 year to date sales data is for the 39 weeks to 28
December 2019 or 29 December 2018.
3. Market share references are UK based and sourced from IRI, 39
weeks ended 28 December 2019.
4. International sales growth is stated on a constant currency
basis and is disclosed in the Grocery segment for reporting
purposes.
5. Net debt and EBITDA on a pre-IFRS 16 basis.
Certain statements in this 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:
http://www.premierfoods.co.uk/media/image-gallery
Quarter 3 and Quarter 3 year to date sales
===========================================
GBPm Quarter 3 Quarter 3 Year to date
2019/20 2018/19 Change 2019/20 2018/19 Change
Grocery
Branded 154.0 153.2 0.5% 372.1 363.4 2.4%
Non-branded 27.1 27.3 (0.8%) 72.9 73.2 (0.4%)
-------- --------- ------- -------- -------- -------
Total 181.1 180.5 0.3% 445.0 436.6 1.9%
Sweet Treats
Branded 52.4 48.7 7.6% 143.9 135.4 6.3%
Non-branded 28.7 26.4 8.8% 40.0 41.7 (4.2%)
-------- --------- ------- -------- -------- -------
Total 81.1 75.1 8.0% 183.9 177.1 3.8%
Group
Branded 206.4 201.9 2.3% 516.0 498.8 3.5%
Non-branded 55.8 53.7 3.9% 112.9 114.9 (1.8%)
-------- --------- ------- -------- -------- -------
Total 262.2 255.6 2.6% 628.9 613.7 2.5%
-------- --------- ------- -------- -------- -------
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END
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