Premier Foods has said that it plans to spend most of its earnings from the first half of the year on its supply chain, with the UK battling a shortage of food items as it emerges from the pandemic.
The company, which produces Mr Kipling and Cadbury cakes among others, reported a pre-tax profit of £30.7 million (€36.3 million) for the six months ending October 2.
It expects full-year capital expenditure of about £25 million (€29.6 million) as it accelerates investment across the supply chain. In the first half of the year, Premier Foods spent £6.3 million.
The British company saw a working capital outflow of £23.2 million in the first half, compared to an inflow of £4.5 million a year earlier.
'This outflow in the half was largely due to higher stock levels compared to six months ago as the group builds stock for the Christmas season,' Premier Foods said.
In the first half of its financial year, Premier Foods said that branded revenue was 6.1% lower than the previous year, due to tough comparatives, while compared to the corresponding period two years ago, branded revenue rose by 11.4%.
"Our brands have performed especially well with growth versus two years ago of +11.4% and increased market share in both Grocery and Sweet Treats, illustrating the continued success of our branded growth model," commented Alex Whitehouse, chief executive.
"I am particularly pleased with how well the business is successfully navigating the widely reported industry wide challenges including logistics, labour shortages and input cost inflation to deliver such a strong set of results, which again underlines the robustness of our operating capabilities."
Outlook For The Remainder Of The Year
The group, which recently announced a new ESG strategy, said that it has a series of 'exciting brand plans' lined up for the second half of the year, and has put in place 'robust plans' to navigate through the various industry-wide challenges, such as the current driver shortage.
"We enter the second half of the year with strong momentum, and with a series of exciting plans in place for our brands, we remain firmly on track to deliver on our profit expectations for the full year," Whitehouse added.