TIDMPFD TIDMIRSH
RNS Number : 3153N
Premier Foods plc
17 January 2019
17 January 2019
Premier Foods plc (the "Company" or the "Group")
Quarter 3 Trading Statement for 13 weeks ended 29 December 2018
-- Q3 Group sales down (2.2%) as previously reported logistics
programme impacted Sweet Treats sales
-- Q3 Branded sales +0.2% and +0.4% year to date
-- Q3 UK Grocery sales excluding International up +2.7%
-- Market share gains in major brands
-- Continued Mr Kipling growth with sales up +5% in Q3 and +10% year to date
-- Lower margin Non-branded Sweet Treats sales down (20.7%)
-- Trading profit and adjusted eps expectations for the full year remain unchanged
Gavin Darby, Chief Executive Officer
"Our third quarter of the year saw resilient trading through the
key Christmas period in UK Grocery and Branded Sweet Treats with
our top 5 brands all growing market share. Our Batchelors brand has
now delivered eight consecutive quarters of sales growth and we saw
another good performance from Mr Kipling. We faced into two sets of
challenges in the quarter - lower International sales and our
logistics programme, which as expected, affected cake sales volumes
early in the quarter. As we look to the fourth quarter, we expect
to see a good performance from Branded Sweet Treats, we have a good
innovation plan lined up and our expectations for Trading profit
and adjusted eps for the full year are unchanged."
Sales % change Q3 Q3 Year to date
--------------------------------- --------------------------------
Grocery Sweet Treats Group Grocery Sweet Treats Group
-------- ------------- -------- ------------- -------
Branded (0.6%) 2.7% 0.2% (1.5%) 5.7% 0.4%
Non-branded 2.5% (20.7%) (10.3%) 9.2% (18.1%) (2.6%)
-------- ------------- -------- -------- ------------- -------
Total (0.1%) (6.9%) (2.2%) 0.2% (1.1%) (0.2%)
-------- ------------- -------- -------- ------------- -------
Trading update
Group sales were GBP255.6m in the third quarter of the year,
GBP5.8m lower than the same period a year ago, primarily due to
decreased sales of lower margin Non-branded Sweet Treats. Branded
sales were +0.2% higher in the quarter, while Non-branded sales
were (10.3%) lower. In the first three quarters of the financial
year, Group sales were marginally lower as Branded sales growth of
+0.4% was offset by lower Non-branded sales.
The Group has grown market share(3) in aggregate across its
categories during the quarter, with its largest three brands, Mr
Kipling, Bisto and Batchelors all notably delivering both volume
and value share gains in the period.
In the Grocery business, Batchelors sales were ahead of the same
period last year and have now recorded eight consecutive quarters
of growth while Nissin Soba noodles grew by over 40% in the
quarter. Ambrosia returned to revenue growth and grew market share
reflecting improved instore execution while Angel Delight sales
increased 8% as the convenient pots range was expanded to
incorporate further new products. Loyd Grossman cooking sauces also
returned to growth and as we enter the final quarter of the year, a
new range of convenient Pasta Pots and sachets in a variety of
flavour variants is about to be launched. Bisto and Oxo both
delivered resilient performances through the Christmas period with
both benefiting from media advertising.
Mr. Kipling sales continued their strong momentum from previous
quarters following the brand relaunch earlier in the year,
reporting sales growth of +5% in the quarter and +10% on a year to
date basis. Cadbury cake sales in the UK were also up in the period
due to an improved seasonal range and better instore execution.
Looking ahead to the next couple of quarters, the Group will launch
a range of 30% less sugar Mr Kipling Angel and Chocolate slices,
new Cadbury Caramel Mini Rolls and a platter of Cadbury Crème Egg
cupcakes for Easter.
As previously announced, we expected Sweet Treats sales to be
lower in the third quarter and accordingly, Non-branded Sweet
Treats sales were (20.7%) lower compared to the same period last
year. This was due to the business experiencing lower sales volumes
as a result of implementation challenges associated with its
logistics programme, however customer service levels improved
steadily during the quarter. Additionally, the Sweet Treats
business exited a number of lower margin seasonal and non-seasonal
cake contracts. In the Grocery business, Non-branded sales
increased +2.5% as contract wins in Stuffing and Cooking sauces
were partly offset by lower sales at Knighton Foods.
International sales(4) decreased by (27%) in the quarter, as the
business continued to work through the effects of high stocks of
Cadbury cake in the Australian supply chain. Additionally, the
Group has implemented price rises to export wholesalers to ensure
competitive product pricing across all markets but which resulted
in significantly lower volumes in this customer group in the
quarter. Excluding these two factors, International sales would
have risen 5% in the year to date.
Cash exceptional costs are expected to be GBP6-7m higher in the
full year than previously anticipated due to higher than planned
implementation costs associated with the logistics transformation
programme as described above.
Management update
As previously announced, Gavin Darby, Chief Executive Officer,
will leave the Group on 31(st) January 2019 and the Board's search
process for Gavin's successor is underway. From 1(st) February
2019, Alastair Murray, Chief Financial Officer, will assume the
role of Acting Chief Executive Officer on a temporary basis, in
addition to his existing responsibilities, until a permanent
successor is appointed.
Potential disposal update
The Group continues to hold discussions with third parties
regarding the potential disposal of its Ambrosia brand and the
Board will provide further updates in due course.
Outlook
The Group's Trading profit and adjusted earnings per share
expectations for FY18/19 remain unchanged and Net debt at the year
end is expected to be lower than the prior year. The rate of Net
debt reduction is likely to be lower than the prior year, as the
Company builds raw material and finished goods stock levels to
protect against the risk of delays at ports in the absence of
certainty over the UK's departure from the EU. The Company's target
of reducing Net debt/EBITDA to below 3.0x by March 2020 remains
unchanged.
Ends
For further information, please contact:
Investors and analysts:
Alastair Murray, Chief Financial Officer +44 (0) 1727 815 850
Richard Godden, Director of Investor Relations
& Treasury +44 (0) 1727 815 850
Media:
Maitland
Clinton Manning +44 (0) 20 7379 5151
Joanna Davidson +44 (0) 20 7379 5151
Conference call
A conference call for investors and analysts hosted by Gavin
Darby, CEO and Alastair Murray, CFO, will take place today, 17
January 2019, at 9.00am, details of which are outlined below. A
replay of the conference call will be available on the Company's
website later in the day:
www.premierfoods.co.uk/investors/results-centre
Telephone number: 0800 376 7922 (UK toll free)
+44 20 7192 8000 (standard international
access)
Conference ID: 5697426
Notes to editors:
1. All financial data detailed above is unaudited and has not
been subject to review by the Company's auditors.
2. All sales data relates to the 13 weeks to 29 December 2018 or
30 December 2017, the 'quarter' or the 'period', as appropriate.
Quarter 3 year to date sales data is for the 39 weeks to 29
December 2018 or 30 December 2017.
3. Market share references are sourced from IRI, 12 weeks ended 29 December 2018.
4. International sales growth is stated on a constant currency
basis and is disclosed in the Grocery segment for reporting
purposes.
Certain statements in this management statement are forward
looking statements. By their nature, forward looking statements
involve a number of risks, uncertainties or assumptions that could
cause actual results or events to differ materially from those
expressed or implied by those statements. Forward looking
statements regarding past trends or activities should not be taken
as representation that such trends or activities will continue in
the future. Accordingly, undue reliance should not be placed on
forward looking statements.
A Premier Foods image gallery is available using the following
link:
http://www.premierfoods.co.uk/media/image-gallery
Quarter 3 and Quarter 3 year to date sales
GBPm Quarter 3 Quarter 3 Year to date
2018/19 2017/18 Change 2018/19 2017/18 Change
Grocery
Branded 153.2 154.1 (0.6%) 363.4 368.8 (1.5%)
Non-branded 27.3 26.6 2.5% 73.2 67.0 9.2%
-------- --------- -------- -------- -------- --------
Total 180.5 180.7 (0.1%) 436.6 435.8 0.2%
-------- --------- -------- -------- -------- --------
Sweet Treats
Branded 48.7 47.4 2.7% 135.4 128.1 5.7%
Non-branded 26.4 33.3 (20.7%) 41.7 50.9 (18.1%)
-------- --------- -------- -------- -------- --------
Total 75.1 80.7 (6.9%) 177.1 179.0 (1.1%)
-------- --------- -------- -------- -------- --------
Group
Branded 201.9 201.5 0.2% 498.8 496.9 0.4%
Non-branded 53.7 59.9 (10.3%) 114.9 117.9 (2.6%)
-------- --------- -------- -------- -------- --------
Total 255.6 261.4 (2.2%) 613.7 614.8 (0.2%)
-------- --------- -------- -------- -------- --------
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END
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