Mr. Kipling owner Premier Foods has restored its dividend after 13 years, as annual revenue and profit topped market expectations on strong pandemic-driven demand, product launches and increased advertising.
The maker of Oxo stock cubes and Bisto gravy reported a 24% jump in adjusted pretax profit to £115.3 million ($163.48 million) on revenue of £934.2 million for the year ended April.
Analysts had expected adjusted pretax profit of £112 million on revenue of £926 million, as per a company-compiled consensus of estimates.
'An Outstanding Year'
Chief executive officer of Premier Foods, Alex Whitehouse, commented, "This has been an outstanding year for the business with very strong financial metrics across the board. We have reduced our leverage to 1.9x EBITDA, repaid £190 million of our floating rate bonds saving approximately £10 million in interest costs, and entered into a transformational new pensions agreement.
"As a result, we are pleased to be reinstating dividend payments for the first time in 13 years. We have also just completed the refinancing of a new revolving credit facility with a refreshed bank group, extending maturity to at least 2024, and are today announcing the launch of a new fixed rate bond."
The company remained fully operational throughout pandemic and continued to implement its branded growth model, comprising new product launches and TV advertisements for six major brands, among others.
Whitehouse added, "This, along with a robust performance from our supply chain, ensured we delivered growth ahead of the market. Sales of our brands online more than doubled and our continued focus on this channel led to further market share gains.
"In overseas markets, we are now clearly seeing the benefits of last year's change in strategy with double digit growth in each quarter and 23% in the full year."
Its online performance increased 104%, contributing to a 128 bps increase in market share.
It also reported strong progress towards its ESG goals with a 43% reduction in CO2 emissions since 2008, and an increase in the use of recyclable plastics from 63% to 70%.
"Set against a troubled decade, FY2021 has been positively transformational for Premier Foods as management continued to harvest the benefits of focus, simplification and careful, nay constrained, brand development," Shore Capital analysts said.
Commenting on the company's outlook, Whitehouse said, "We enter this year in a strong position, with the benefit of an expanded consumer base, further TV advertising for our brands and a substantial pipeline of new products planned. We are confident in our trading profit expectations for the full year and we expect adjusted PBT to benefit from lower financing costs.
"As we look to the future, with a transformed business in a demonstrably much stronger financial position, we will continue to move forward at pace and with rigour, applying our brand building skills to expand the business. We will do this through entering new categories in the UK, scaling up our overseas businesses and exploring the opportunity for appropriate bolt on acquisitions."