TIDMPFD TIDMIRSH
RNS Number : 3940U
Premier Foods plc
29 July 2020
29 July 2020
Premier Foods plc (the "Company" or the "Group")
Trading update for the 13 weeks ended 27 June 2020
Strong Q1 trading +22.5%, supporting recently upgraded full year
expectations
-- Q1 Group sales up +22.5%, Q1 Branded sales up +27.0%
-- Q1 UK sales up +23.0%, Q1 Branded UK sales up +27.9%
-- Outperforming the market in every category
-- Online growth of +115%; ahead of the channel and gaining +2.7ppts share
-- Strong household penetration growth, particularly for Grocery brands
-- Advertising investment increasing from four to six major brands this year
-- Recently upgraded expectations for the full year unchanged;
initial Q2 volumes remain elevated
Alex Whitehouse, Chief Executive Officer
"As expected, we continued to see strong demand for our Grocery
brands in Q1, with consumers eating the vast majority of their
meals at home. We have grown faster than our categories during this
period, both in standard retail and online channels. This reflects
not only the strength of our market leading brands but also the
excellent performance of our colleagues across the supply chain to
ensure product availability while working in close collaboration
with our customers to meet this elevated demand."
"The health and wellbeing of all our colleagues has been, and
remains, of paramount importance to us. The additional measures we
put in place to safeguard our teams from early March are unchanged
and our manufacturing and distribution sites have all remained
fully operational."
"We continue to deploy our branded growth model strategy; our
innovation has performed particularly well in Q1 and the first of
our six brands on air this year benefitted from an extended period
of TV advertising in the quarter. We have also observed significant
increases in household penetration of our brands in the quarter, as
Britain has got cooking again and consumers expand their repertoire
of dishes prepared at home. For example, we have seen two million
new households buy our Sharwood's products over the quarter."
"We repaid GBP80m of our floating rate bonds in the quarter
which will reduce our annual interest bill by at least GBP4m and we
are exploring further opportunities to reduce our financing costs
as we continue to reduce Net debt. As anticipated, early Q2 trading
has seen further positive volume trends and our recently upgraded
expectations for the full year remain unchanged."
Q1 Sales % change Grocery Sweet Treats Group
Branded +39.2% +0.5% +27.0%
Non-branded (4.5%) +1.7% (3.3%)
-------- ------------- -------
Total +31.7% +0.7% +22.5%
-------- ------------- -------
Trading Update
===============
Group sales in Q1 increased 22.5% compared to the prior year,
with branded sales up 27.0%. These results substantially reflected
trends seen in the UK business, where total sales increased 23.0%
and branded sales were 27.9% ahead of last year. The Group saw
elevated levels of demand for its Grocery portfolio throughout the
quarter as households continued to experience few opportunities for
eating occasions out of home. While sales grew in double digit
percentage terms in each of the three months within the quarter,
the sales growth rate at the end of Q1 was lower than observed at
the beginning of the period.
The Group benefits from brands which are market leaders in their
respective categories. During the quarter, the Group delivered
consistently high availability of its product ranges through the
supply chain, during this prolonged period of higher demand. As a
result, the Group grew ahead of its categories in the quarter, with
particularly strong market share gains seen in Flavourings &
Seasonings; Quick Meals Snacks & Soups and Cakes. This
performance reflects sustained and dedicated efforts by all those
in the supply chain, keeping all the Group's sites fully
operational, while working in close collaboration with all our
customers.
Another notable feature of the quarter was the extent of growth
in the online channel. Over the last couple of years, the Group has
been investing in its online proposition and capabilities, working
closely with its retail partners. As a result of this, and the
wider market trend, the Group delivered growth of 115% in the
quarter, gaining 270 basis points of market share in this
channel.
Household penetration of the Company's brands has also grown
significantly over the last twelve weeks, due to increased demand
during lockdown. For example, household penetration of our Grocery
brands has increased by 620 basis points in the quarter to nearly
75%, when compared to the prior year.
Grocery
Grocery reported sales of GBP162.1m in Q1 and within this,
branded sales grew significantly, up 39.2% on the prior year. The
Group benefitted from more UK households buying its brands in the
quarter, as consumers sought to expand their range of home cooked
recipes and meals as lockdown restrictions continued. As a result,
all the Group's major Grocery brands delivered double-digit sales
increases compared to the same quarter a year ago, with
particularly notable performances from Ambrosia, Oxo and
Sharwood's. Nissin noodles products also proved to be extremely
popular, with sales more than doubling in the quarter.
The Group also saw demand for its new product ranges higher than
last year's rate of 6.5% of branded revenue, a good example being
the recently launched Cadbury baking mixes which were very well
received by consumers, reflecting a substantial rise in baking at
home during the quarter. This demonstrates that demand for the
Group's product ranges have been not only for its core ranges, but
also new product innovation, as consumers expand their repertoire
of meals eaten in home.
Non-branded Grocery sales declined by (4.5%) reflecting lower
end user demand for the Group's business to business product ranges
due to impacts from less out of home eating and drinking during the
Covid pandemic. This was partly offset by higher volumes of own
label Grocery to retail customers.
Sweet Treats
Sweet Treats sales increased by +0.7% compared to the same
quarter a year ago with branded sales up +0.5%. Cake volumes were
lower than the prior year in the earlier part of Q1, but delivery
of strong commercial plans resulted in a return to growth in the
latter part of the quarter. Mr Kipling was also supported by eight
weeks on air of its Little Thief TV advertising campaign and
benefits from the launch of its Mini pies range and Signature
premium ranges. Cadbury cake sales also grew in the UK, with the
core Cadbury Mini Rolls range performing very well across all
customers.
International
International sales grew by 13% in the quarter at constant
currency, partly due to a softer comparative in the prior year as
Brexit demand stocks unwound in Ireland. Australia cake sales were
lower as demand fell during lockdown restrictions, partly offset by
a strong Sharwood's performance in all geographies. As previously
announced, the Group has implemented a revised strategy for its
International business with the objective of building a
sustainable, profitable growing business, with greater market and
executional focus.
Outlook
========
Q2 sales have started strongly, however the Group anticipates
this trend to normalise through the quarter as consumers gradually
return to eating out of home. Looking to the full year, the Group
expects to make further progress as it continues to employ its
successful branded growth model strategy, which has been
instrumental in delivering twelve successive quarters of UK revenue
growth. Recently upgraded expectations for FY20/21 are unchanged,
which includes anticipated further Net debt reduction this
year.
Ends
For further information, please contact:
Institutional investors and analysts:
+44 (0) 1727
Duncan Leggett, Chief Financial Officer 815 850
Richard Godden, Director of Investor +44 (0) 1727
Relations & Treasury 815 850
Media enquiries:
Headland
+44 (0) 7884
Ed Young 666830
+44 (0) 7884
Francesca Tuckett 667661
Conference Call
A conference call for investors and analysts will take place on
29 July 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.
Telephone number: +44 20 7192 8000
Telephone number (UK Toll
free) 0800 376 7922
Conference ID: 6549513
http://www.premierfoods.co.uk/investors/results-centre
A Premier Foods image gallery is available using the following
link:
http://www.premierfoods.co.uk/media/image-gallery
Certain statements in this trading update 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 .
Notes to editors:
1. Sales data is for the thirteen weeks to 27 June 2020 or 29 June 2019 as appropriate.
Q1 Sales (GBPm) FY20/21 FY19/20 % Change
Grocery
Branded 141.8 101.8 +39.2%
Non-branded 20.3 21.3 (4.5%)
-------- -------- ---------
Total 162.1 123.1 +31.7%
Sweet Treats
Branded 47.2 47.0 +0.5%
Non-branded 4.8 4.7 +1.7%
-------- -------- ---------
Total 52.0 51.7 +0.7%
-------- -------- ---------
Group
Branded 189.0 148.8 +27.0%
Non-branded 25.1 26.0 (3.3%)
-------- -------- ---------
Total 214.1 174.8 +22.5%
-------- -------- ---------
2. Market share data sourced from IRI, 13 weeks ended 27 June 2020.
3. Household penetration data sourced from Kantar Worldpanel, 12 weeks ended 14 June 2020.
4. Online channel data sourced from Major multiple retailer online channel platforms
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END
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July 29, 2020 02:00 ET (06:00 GMT)
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