St Albans-based Premier Foods has announced slow growth for its Sweet Treats division, with a 0.8% growth from £93.1m to £93.8m for the 26 weeks to 3 October 2015.
Branded Sweet Treat sales, including Mr Kipling ambient cakes, were down -1.3% from £81.4m to £80.4m but the division’s profitability grew 54.2% to £7.4m
The company said Mr Kipling had delivered volume and sales increases, with sales bolstered by recent product launches including Deluxe Viennese Whirls, Fabulous Fancies and Victoria Sponges. It added Cadbury Cake had received an encouraging reception for its new products, including Hot Cakes, and the brand had benefited from its first television advertising in eight years.
Group EBITDA for the period was up 9.2% from £53.4m to £58.3m and the company said it expected its net debt of £585.3m to reduce significantly in H2.
Gavin Darby, chief executive officer at Premier Foods, said: “We are pleased to see group branded sales growth in both the first half and second quarter of this financial year, as well as trading profit progression. This reflects the clear benefits from our continued commitment to brand investment and innovation. It is also encouraging to see strong sales growth in our International business following the investment we’ve made in additional resources.
“In the third quarter of the year, we expect to deliver positive group branded sales growth, with Sweet Treats performing more strongly than Grocery. The industry backdrop remains a challenging one, but with strategies which are delivering tangible results and significantly higher marketing spend planned for the second half, our profit expectations for the year remain unchanged.
“In our Sweet Treats business, we are on track to deliver double-digit margins in FY15/16, a year earlier than previously expected. Looking further forward, we remain committed to investing for sales and profit growth and expect to deliver branded sales growth for the group of 1-2% in FY16/17 and the medium term.”