Premier Foods plc PFD Interim Management Statement

  Premier Foods plc (PFD) - Interim Management Statement

RNS Number : 2665P
Premier Foods plc
23 October 2012
 



23 October 2012

                              Premier Foods plc

                                       

           Interim Management Statement for the three months ending

                              30 September 2012

                                       

        Third Successive Quarter of Grocery Power Brands Sales Growth

                                       

Premier Foods today reports the  Group's Interim Management Statement for  the 
three months ending 30 September 2012.

                                       

Highlights

                                       

·     Underlying sales excluding Milling^1,3 up 2.0% in Q3

·     Power Brand sales up 2.0% YTD

·     Grocery Power Brands sales up 4.1% YTD

·     Additional Overhead Cost Reductions of £20m to be achieved in 2013  

·     Full Year expectations remain unchanged

 

Michael Clarke, Chief Executive Officer said:

 

"I'm delighted that we've grown sales of our Grocery Power Brands for a  third 
successive  quarter  despite  the   challenging  consumer  environment.   This 
underlines the substantial progress we have made this year in stabilising  the 
business and  delivering against  our strategic  priorities. Following  recent 
divestitures we  expect to  deliver a  further £20  million of  overhead  cost 
reductions in 2013, over and above the £40 million of savings we will  deliver 
in 2012.

 

"We intend to build on this progress  as we continue to drive momentum  behind 
our Grocery Power Brands particularly  through capturing opportunities in  the 
growing convenient meals  and snacking  segments. We are  also continuing  our 
work to unlock the value in  our Bread business, through taking the  necessary 
decisions to improve sustainable profitability.  We have a solid programme  in 
place  for  the  important  Christmas   trading  period  and  our  Full   Year 
expectations are unchanged."

 

Introduction

 

Underlying sales for the three months  to 30 September 2012 increased by  2.0% 
compared to the prior  year with another good  performance from the  Company's 
Power Brands, continuing the momentum seen in the first half of the year.

 

Total branded sales increased by 0.2% to £289.0m in the third quarter, also in
line with  the trend  seen  in the  first half  of  the year,  reflecting  the 
performance of the Power Brands, offset by lower sales of our support  brands. 
Non-branded sales grew by  9.7% in the quarter,  reflecting contract gains  in 
Cake and pricing benefits. The  Company's branded sales mix was  approximately 
80% in the quarter.

 

 

Quarter 3 Sales performance^1,2,3

 

£m                        2012 Q3  2011 Q3  Change
       
Power Brands                206.1    202.0   2.0%
Support brands               82.9     86.4  (4.1%)
Total branded               289.0    288.4   0.2%
Non-branded                  75.7     69.0   9.7%
Total sales (ex. Milling)   364.7    357.4   2.0%

 

Quarter 3 Year to date Sales performance^1,2,3

 

                          2012     2011
£m                                         Change
                         Q3 YTD   Q3 YTD
       
Power Brands               625.0    612.6   2.0%
Support brands             257.0    265.6  (3.2%)
Total branded              882.0    878.2   0.4%
Non-branded                226.7    214.2   5.8%
Total sales (ex Milling) 1,108.7  1,092.4   1.5%

 

Grocery

 

Grocery Power Brands delivered year on year  sales growth of 4.1% in the  nine 
months to  30 September,  a strong  performance reflecting  improved  customer 
collaboration, consumer marketing investment and new product innovation.

 

Ambrosia delivered increased sales in the quarter, driven by the new rice pots
range while  Oxo sales  increased significantly  reflecting improved  customer 
collaboration. Batchelors'  continued its  strong performance  into the  third 
quarter, supported  by the  new Deli-Box  range and  the successful  'Fuelling 
Britain' campaign. During  the quarter, the  consumer and trading  environment 
remained challenging with continued high levels of promotional activity in the
market.

 

The quarter  was  characterised by  a  quieter period  of  consumer  marketing 
investment (during  the Olympics)  compared to  the first  half of  the  year. 
However, the final quarter will see a return to increased levels of  marketing 
activity. This will include a particular  focus on Batchelors' and Bisto,  the 
latter to support the recent launch of Bisto 'Stock Melts'.

 

Bread

 

Sales and  market share  of Hovis  bread increased  during the  quarter, in  a 
category which  continues  to  be  highly  competitive.  Marketing  investment 
continued, with further advertising support of the new Hovis Farmer's Loaf.

 

In both the Milling and  Baking parts of the  Bread business, the Company  was 
successful in the quarter  in delivering price  increases across its  customer 
base to offset wheat price inflation.

 

However, supply chain efficiencies were impacted  by a lower quality UK  wheat 
harvest and higher net  costs to serve.  In light of  the recent harvest,  the 
Company continues  to review  its wheat  procurement strategies  to ensure  it 
maintains optimum quality across its product range, particularly for Hovis.

 

Following a  recent  business review,  and  consistent with  its  approach  to 
improving sustainable profitability in  Bread, the Company  will be unable  to 
renew a Bread contract it  holds with a retail  customer with effect from  mid 
2013. This contract  loss accounts  for approximately £75m  annual sales,  has 
very low margins, is costly to service and will not affect 2012 performance.

 

As previously announced, the Company is examining a range of options to unlock
the future value of the Bread  business and address the challenges facing  the 
category.

 

Cost Reduction & Restructuring Programme

 

Following recent  divestitures,  the  Company expects  to  deliver  additional 
overhead cost reductions of £20m  in 2013, over and  above the £40 million  of 
savings to be delivered in 2012.

 

Financial Position

 

The financial position of the Company remains unchanged since the  publication 
of the Half  Year results.  Disposal proceeds  of around  £275m are  currently 
expected to  be  received  during the  second  half  of the  year.  This  will 
represent a 22% reduction in Net debt from the Half Year position of  £1,269.4 
million.

 

Outlook

 

The Company has made substantial progress  in stabilising and cleaning up  the 
business and delivering  against its  growth strategies.  While the  economic, 
trading and consumer environment remains challenging, the Company's full  year 
expectations remain unchanged.

 

                                   ~ Ends ~

 

For further information, please contact:

 

Institutional investors and analysts:

Mark Moran, Chief Financial
Officer                                                   +44 (0) 1727 815 850

Richard Godden, Head of Investor Relations                                    
+44 (0) 1727 815 850

 

Media enquiries:

Lisa Attenborough, Director of Communications                              
+44 (0) 1727 815 850

 

Maitland                                                                                              
+44 (0) 20 7379 5151

Tom Buchanan

Brian Hudspith

 

Conference Call

 

A conference call  for investors and  analysts will take  place on 23  October 
2012 at  8:30am,  details  of which  are  outlined  below.  A  replay  of  the 
conference   call    will   be    available    on   the    Group's    website, 
www.premierfoods.co.uk.

 

Telephone number:                 0808 109 0700            (UK toll free)

+44 20 3003 2666       (Standard international access)

 

 

Notes to editors:

 

1.         The results of the Group exclude results of the following  disposed 
businesses: Meat-free, Canned grocery, Brookes Avana, Irish Brands, Vinegar  & 
Sour Pickles and Elephant Atta Ethnic flour.

2.         All sales data for Premier Foods is for the period to 30  September 
2012 or 30 September 2011 as appropriate.

3.         All sales are stated on an 'Underlying business' basis and  exclude 
Milling, commercial adjustments and a non-core contract loss, as described  in 
the Company's 2012 Half Year results.

 

Certain statements in  this Interim Management  Statement are forward  looking 
statements. By their nature,  forward looking statements  involve a number  of 
risks, uncertainties or assumptions that could cause actual results or  events 
to differ  materially from  those expressed  or implied  by those  statements. 
Forward looking statements regarding past  trends or activities should not  be 
taken as representation that  such trends or activities  will continue in  the 
future. Accordingly, undue reliance  should not be  placed on forward  looking 
statements.

 

A Premier Foods image gallery is available using the following link:

 

www.premierfoods.co.uk/media/image-gallery/

           

As Britain's largest food producer, Premier  Foods is committed to being  'The 
Best in  British Food'  - delivering  the taste  the British  love, with  food 
that's made in Britain by people who understand British consumers.  We  supply 
a range of  retail, wholesale, foodservice  and other customers  with some  of 
Britain's best  loved brands,  including Ambrosia,  Batchelors, Bisto,  Hovis, 
Loyd Grossman, Mr. Kipling,  Oxo and Sharwood's .  The company employs  around 
10,000 people operating from over 40 sites from Plymouth to Glasgow.

                     This information is provided by RNS
           The company news service from the London Stock Exchange
 
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IMSBLLLLLBFZFBZ -0- Oct/23/2012 06:00 GMT