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Half-Year Profits Rise 50% At Premier Foods

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Half-Year Profits Rise 50% At Premier Foods

British food producer Premier Foods, owner of the Hovis, Mr Kipling and Ambrosia brands, has raised its full-year expectations, after recording a 50% year-on-year increase in its underlying business trading profit during the six months to 30 June 2013.

Half-year trading profit rose from £31.6 million in the same period a year ago to £47.4 million, boosted by growth in sales of Premier Foods' 'power' brands.

The company stated that branded sales now account for more than 90% of grocery sales, with power brands accounting for two-thirds of sales. Total branded sales in Premier's grocery division increased by 1.3%, driven by a 4% boost in grocery power brand sales. Total grocery sales fell by 1% overall, however, due to an 18.5% drop in non-branded sales, as contracts ended.

Premier Foods said that its Ambrosia desserts brand had benefited from a new marketing campaign, along with the launch of its new 'Devon Dream' cold pouring custard product.

'Bisto and Oxo performed well in the first six months of the year, reflecting their leading positions in a growing gravy and stocks category. Elsewhere the Deli-Box range, successfully launched last year, continues to contribute to the strong performance of Batchelors', the company added.

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Sales of Premier Foods' branded bread products - led by Hovis - grew 1.8% year-on-year to £185.2 million during the six-month period, with overall bread division sales up by 8.2% to £355.9 million.

The restructuring of the company's bread and milling business is currently 'well ahead of plan', according to the company, following the loss of a £75 million contract with the Co-operative Group last year.

Premier Foods said that it had already managed to meet its target of £20 million in cost savings for 2013, and stated that it had identified a further £10 million in 'complexity' cost savings to be made in the second half of the year.

"We will continue to drive profitable top-line growth by focusing on growing our categories supported by ongoing cost savings", Gavin Darby. chief executive at Premier Foods said today. "A 50% increase in trading profit is a very encouraging result given the highly competitive environment. This shows that our turnaround strategy is delivering at the bottom line."

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He added, "The second half will see further plans to grow our power brands, in addition to a new £10 million of cost savings. As a result, we now expect full-year trading profit to be around the top of market expectations."

 

© 2013 - ESM: European Supermarket Magazine by Ellen Lunney 

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