The ceo said in a statement accompanying the results posted yesterday (November 15): “Following a good first quarter where we saw a number of our brands in growth, the second quarter was much weaker in our Grocery business due to warmer weather which resulted in lower sales in the first half overall.”
But Darby added that Premier’s Sweet Treats and International businesses continued their “strong momentum”, delivering against the company’s strategic priorities and growing more than 4% and 9% respectively.
Weak Grocery sales
Second-quarter underlying Grocery sales fell by 9.5% due to warmer weather after a good first quarter, according to the firm.
First-half group underlying sales were 1.8% down on the same period last year. Weak Grocery sales were partially offset by a rise in Sweet Treats – up by 4.1% on the same half of 2015.
The Sweet Treats and International divisions were said to deliver consistently strong quarter-on-quarter growth.
Total sales rose by 2% reflecting consolidation at Knighton Foods.
Underlying trading profit of £48M, was £2M lower than the first half of last year – partly due to increased marketing investment, said the company.
Net debt of £556M was £29M lower than in the same period of 2015.
Premier Foods’s profit and net debt expectations for the year remained unchanged, said Darby.
‘Confident in our strategic progress’
“We remain very confident in our strategic progress, our customer relationships are strong and we have an extensive new product innovation programme planned for the balance of the year,” he said.
Darby was pleased with the progress made on the 2016 triennial pension scheme valuations, which had resulted in the net present value of the pension deficit recovery plan expected to reduce by about £100M.
“We expect group sales to grow between 2–4% in the second half of the year and our profit and net debt expectations for the full year remain unchanged,” said Darby.
The manufacturer blamed the warmer than average September for a 5.4% fall in second-quarter sales.
Meanwhile, this year could be world’s warmest on record, revealed new statistics from the World Meteorological Organization (WMO). Temperatures during the first nine months of this year were 1.2°C above pre-industrial records, according to WMO scientists. The warmest year on record was last year.
Premier Foods’s latest results – at a glance
• First-half group underlying sales down 1.8% due to weak Grocery sales, falling 4.0%; partly offset by good performance in Sweet Treats up 4.1%
• Second-quarter Grocery underlying sales down 9.5% due to warmer weather after good first quarter
• Sweet Treats and International delivering “consistently strong quarter-on-quarter growth”
• Total reported sales up 2% reflecting Knighton Foods consolidation
• Underlying trading profit £48M, £2M lower partly due to increased marketing investment
• Net debt £556M at first half; £29M lower than previous year’s first half
• Combined IAS 19 pensions deficit £228.8M, due to fall in discount rates
• Net present value of pension deficit recovery schedule expected to reduce by £100M
• Profit and Net debt expectations for the year unchanged