In its half-year results for the 26 weeks ended 26 September 2020, Premier reported revenues of £421.5m and trading profit of £65.8m, up 15% and 28.7% respectively.
Grocery paved the way for sales success at Premier, with revenues of branded goods – such as Bisto, Batchelors, Oxo, Ambrosia, Sharwood’s, McDougall’s and Nissin – up 25.2% in the first half of 2020.
The boost in grocery was largely thanks to a larger number of people cooking at home as a result of the coronavirus pandemic driving up demand.
Non-branded grocery sales during dipped 4.7% during the reported period, while sales of non-brand sweet treats fell 5.8%.
Back to normal in quarter two
Alex Whitehouse, Premier Foods chief executive officer, said: “We have seen many more meal occasions being consumed at home, particularly in the first quarter, followed by a transition towards more normal levels of demand through quarter two.
“During this entire time, we have continued to drive our branded growth model, launching insightful new products and supporting our three biggest brands with above the line advertising.
“Consequently, we have continued to grow faster than all our categories, increasing market share in each one – a reflection not only of our strong brands but also the amazing performance of our supply chain colleagues to ensure product availability.”
Whitehouse said the second half of the year will be spent focusing on growth through new product innovation, as well as a revised marketing strategy that will see six major brands advertised on TV.
Commenting on the results, head of research at Shore Capital Clive Black said: “After many years of hard work and aided by the COVID-19 driven transfer of volumes back into the grocery aisles, calendar year 2020 to date has been a transformational period for the Premier Foods investment case.”
Ahead of forecasts
Martin Deboo, equity analyst at Jefferies, said Premier was well ahead of its forecasts, reflecting good operating leverage on sustained higher at-home food sales.
“Full-Year 2021 trading profit is expected to be ahead of current market expectations, which we read as around £140m,” he added. “With around £8m in the bag from the H1 beat, we expect the conversation this morning to focus on the moving parts of H2.
“That there will be higher marketing, COVID and corporate costs seems relatively certain. So the question is whether there will be further positive operating leverage sufficient to offset these, or not.”
Meanwhile, last week, food sales remain strong at Associated British Foods, but coronavirus pressures on the business’s retail operations cut into annual sales and profit.