Premier Foods’s sales continue to slide

By Michael Stones contact

- Last updated on GMT

Premier Foods's sales continued to slide in the fourth quarter of last year
Premier Foods's sales continued to slide in the fourth quarter of last year

Related tags: Marketing, Premier foods

Premier Foods has reported another fall in sales for the fourth quarter of last year, while reaffirming its pledge to drive down costs .

The manufacturer reported total sales had dropped by 4.6% to £255.3M in the final quarter of last year. Total branded sales fell by 3.4% to £219.6M, while Power Brand sales dropped 3.5% to 158.6M over the period. Non-branded sales declined by 11.5%.

But Premier Foods boss Gavin Darby said branded sales had improved last month.

“I am pleased with the improved branded sales trends in the fourth quarter, and particularly our key December trading period, in what continue to be challenging market conditions.

“The trend in branded sales improved for the second consecutive quarter, our market share in December was the highest it's been for the last four years and we are encouraged by positive results from areas of the business in which we invested.”

‘Branded sales improved’

Mr Kipling delivered a particularly strong performance following its re-launch in the second half of last year, said Darby.

Premier Foods’s market share in December was the highest recorded for four years, the firm claimed.

Response to trends

Premier Foods planned to adapt its business to three key trends:

  • Rising discounter sales: Pursue “appropriate opportunities” ​while continuing to take “a disciplined approach” ​to assessing return on investment
  • Online sales: Develop customised joint business plans, identify cross-selling opportunities and recruit additional resources
  • Convenience sales: Premier considered its category leadership positions, together with portfolio offerings for ‘On the Go’ and ‘Meal for Tonight’ consumer trends meant it was already well positioned

In a summary of results for the year, Premier Foods posted a trading profit of £131M, in line with expectations. Adjusted pretax profit was £77.1M, with adjusted earnings per share of 8.6p. The proportion of total sales delivered by brands rose from 88.7% last year to 89.2% for the year ended December 31 2014.

International business

The firm reported good performances in Ireland and the US albeit offset by adverse currency movements. Premier pledged to double investment in its international business unit over the next 12 months to help drive growth in target areas such as China and the US.

Net debt stood at £567.6M at the end of last year, in line with expectations.

Meanwhile, with the near-term market conditions remaining challenging, the firm pledged to continue its programme of brand investment and cost cutting. “The company’s commitment to brand investment continues, with consumer marketing expenditure expected to double in the in the first calendar quarter of 2015,” ​according to its trading statement.

“At the same time the company will retain a tight focus on costs, trading profit and organic deleveraging …”

The business was continuing to adapt to reflect changes in shopper behaviour and their impact on the retail environment. “These trends include increased sales in the discounter channel, increasing online volumes and a trend towards shopping in smaller convenience outlets,”​ it said.

Meanwhile, last October the firm reported the value of branded sales had dipped by 4.1% in its third quarter for the three months to September 30, as the business suffered from supermarkets losing share to discounters​.

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