Premier Foods, the maker of Oxo stock cubes and Bisto gravy, has raised its full-year trading profit outlook for the second time as it expects stronger demand for its brands during pandemic-led government restrictions on eating out.
The Mr Kipling cakes maker said trading profit rose 28.7% to £65.8 million (€73.4 million) for the 26 weeks ended Sept. 26, ahead of a company-supplied consensus of £62 million (€69.1 million), as more people cooked at home during the lockdown.
The company had said in June it expected revenue and profit to exceed estimates for the year.
"In the first half of the year, demand for our branded product ranges has been exceptional, particularly in our Grocery businesses which have helped deliver strong profit growth, accelerated debt reduction and a lowest ever net debt/EBITDA ratio of 2.3x," commented Alex Whitehouse, chief executive.
"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."
It expects continued revenue growth in the second half, driven by new products, strong commercial plans and increased television marketing, along with higher demand due to the closure of restaurants and pubs for four weeks across England.
The company, whose Bisto, Batchelors, Oxo, Ambrosia, Sharwood's, McDougall's and Nissin brands all reported double-digit revenue growth for the first half, said it would be launching new products in this range to cash in on the demand.
"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," Whitehouse added.
"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.
Jefferies analysts said the company's new medium-term leverage target of 1.5 times its core earnings hinted at a return to paying dividends at some point.