Premier Foods’s results sweetened by Sweet Treats

By Michael Stones

- Last updated on GMT

Premier's results were sweetened by its Sweet Treats performance
Premier's results were sweetened by its Sweet Treats performance

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Premier Foods claims a strong Sweet Treats performance helped the business achieve year-to-date group sales up by 0.3%.

Sweet Treats sales rose by 6.5% – reflecting the successful Cadbury innovation programme – in the 13 weeks to January 2 2016.

Group sales were up by 0.1% during the quarter, while branded sales fell by 1%. Year-to-date branded sales fell by 0.4%.

Third-quarter grocery sales were down by 2.7%, with a year-to-date fall of 0.9%.

International sales

International sales climbed by 9.8% in the third quarter at constant currency.

Premier ceo Gavin Darby said group sales were solid, against a food sector background of negative top-line growth. “As expected, our Sweet Treats business performed very well, with sales up 6.5% due to a strong innovation programme, especially in Cadbury cake,”​ he said.

Last year the business sold 185M mince pies, 8% more than last year, reflecting growth in non-branded sales.

“While we are encouraged by the results of our innovation programme to date, grocery sales were held back in the quarter due to an unexpectedly mild December and a decision to reduce promotional activity of Ambrosia.

“Sales in our international business continued their strong trajectory from Q2 ​[second quarter], growing by 10% in the quarter 3 ​[Q3]. We have a strong innovation programme in place for the fourth quarter and our profit and net debt expectations for the full year remain unchanged.”

Double digital contribution

The manufacturer said its Sweet Treats business remained on track to deliver double-digit divisional contribution margins in the 2015/2016 financial year.

​The company has a strong programme of innovation planned for the fourth quarter and profit and net debt expectations for the full year are unchanged,​it claimed.

The group’s sales growth targets of 1-2% for the 2016/2017 financial year and the medium term also remained unchanged.

Investec analyst Nicola Mallard said the small miss on branded performance in the third quarter was  due to specific reasons, including mild winter weather and promotional activity, so should not be “seen as any indication that the strategy is not delivering”.

The group was simplifying its balance sheet by withdrawing from its £80M debtor securitisation programme, said Mallard. “This is complicated to administer and was not utilised at the half year.”

Investec repeated its ‘buy’ advice on Premier Foods’s stock.

Read why city analyst Shore Capital judged Premier Foods to be “past its darkest hour” , here.

Premier Foods’s results – at a glance

• Q3 Group sales up 0.1% and branded sales down 1%

• Q3 year-to-date group sales up 0.3% and branded sales down 0.4%

• Q3 Sweet Treats sales up 6.5%

• Q3 Grocery sales down 2.7% and year-to-date down 0.9%

• International sales up 9.8% in Q3 at constant currency

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