Premier focuses on cost efficiency as profit falls

Premier Foods‘s underlying profit dropped 9.3% in the 52 weeks to April 1

Premier Foods reported a 9.3% drop in underlying profit to £117M in its full-year trading update, as the business vowed to focus on cost efficiency and revenue growth.

The Mr Kipling owner’s underlying profit fell £12.1M in the 52 weeks to April 1, it reported yesterday (May 16). Group underlying sales were down 1.4% to £790.4M, adjusted profit before tax was down 11.8% to £74.2M, and basic earnings per share dropped 82.9% to 0.7p.

Premier Foods said it was changing its strategy to keep up with the evolving market.

‘A challenging financial year’

The manufacturer’s ceo Gavin Darby said: “This financial year has been a challenging one for the industry, with the return of food inflation and changing retailer promotional strategies. Despite this, we have grown market share in six of our eight largest brands, outperformed many of our peers in the latter part of the year and accelerated international sales growth to 18%.

“With the industry changing rapidly, we have updated our strategy to give an equal focus to revenue growth, cost efficiencies and cash generation. In the UK, growing ahead of our categories continues to be a core objective for us and our plans for International are for further strong growth.”

Despite the fall in sales, Premier’s operating profit increased 12.7% to £61.5M. Its International division reported an 18% rise in sales.

‘Solid footing’

The upcoming year had started on a “solid footing”, Darby said. Its customer relations remained strong, and it continued to invest in innovation and marketing.

Darby said: “We are excited by our global strategic relationships with Cadbury and Nissin, and our recently announced cost savings programme is expected to deliver £20M over the next two years.

“We are focused on reducing our leverage ratio through profit improvement and debt reduction. We plan to deliver progress in this financial year, while noting this progress is expected to be weighted more to the second half of the year.”

Premier Foods results – at a glance
  • Underlying profit down 9.3%
  • Underlying sales down 1.4%
  • Basic earnings per share down 82.9%

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