Premier Foods Plc, the maker of Mr Kipling cakes, said underlying revenue fell 6.1 per cent in the first half as warmer weather cut sales of Batchelors soups and the company reduced discounting to boost margins.
Underlying sales excluding disposals declined to £364.4 million pounds from £387.9 million a year earlier, the St. Albans, England-based company said today in a statement. Underlying trading profit rose 2.1 per cent to £48.1 million as Premier moved some marketing spending into the second half.
“In an environment of robust competitor activity, the company chose to protect margins over sales, with some consequential loss of share,” the maker of Loyd Grossman pasta sauces said in the statement. Premier reduced reliance on “deep-cut” unprofitable promotions, it said.
Premier said the trading profit outlook for the year is unchanged and that it will benefit in the second half from more marketing and product introductions. Items planned for the second half include Bisto gravy pastes and Cadbury sponge puddings, as well as a re-launch of Mr. Kipling cakes, including a television advertising campaign.
“We’ve got a disproportionately strong firepower in the second half,” chief executive officer Gavin Darby said today on a conference call. “Marketing innovation is going to be the lifeblood of the future growth.”
Share Performance
Premier shares rose 0.5 per cent to 46.75 pence at 8:14 am in London, paring their decline this year to about 43 per cent. Premier is the worst performer this year among the 38 companies on the FTSE All-Share Consumer Goods Index.
“Assuming normal weather patterns, we expect an improved second half branded sales performance and our trading profit expectations for the year remain unchanged,” Darby said in the statement.
The company has been selling assets and creating joint ventures, including with the Hovis bread brand, to cut debt that resulted from highly leveraged acquisitions, culminating in the £1.2 billion takeover of RHM Plc in 2007.
“The company’s focus on de-complexity continues to deliver results,” it said today.
Premier had an operating loss in the period of £10.1 million, compared with profit of £5.2 million a year earlier.
Bloomberg News edited by ESM
