Premier Foods reports £86.1m profits

Premier Foods, the manufacturer of Mr Kipling and Cadbury cakes, has reported a 3.5% rise in pre-tax profits to £86.1m for the year to the start of April.

Premier Foods also reported that revenues were up 0.6% to £771.7m, ahead of expectations. The company has also succeeded in reducing its debt to £534.2m (a reduction of £50m), and sales guidance for next year has been upped to between 2% and 4% growth.

A takeover attempt by US spice firm McCormick was rebuffed last month in favour of a partnership with Japan’s Nissin, which took a near 20% stake. But that left shareholders unhappy, as they missed out on a cash offer with a hefty premium.

Nissin’s managing director Tsunao Kijima has been named a non-executive director on the company’s board, it announced today.

Gavin Darby, chief executive of Premier Foods, said: “We are very pleased to report sales growth both in the year and the fourth quarter in what continues to be a deflationary market.

“Our strategy of investing behind our brands and bringing new innovative products to market continues to deliver very positive results, with six of our major brands growing on average plus 3.4% in the year.”

He pointed in particular to the sweet treats arm of the company: “The sweet treats business reported sales growth in every quarter of the year, while the international business also displayed excellent progress during the year with sales up 18%.”

Increased investment in cake bakeries

The update also said that trading profit for the year was £131.0m, in line with both the prior year and the company’s expectations. Within this, the group invested approximately £3m more on consumer marketing compared to the previous year, while depreciation was £2.2m higher, following recent increased levels of capital investment in the group’s cake bakeries.

Sales improved in six of the company’s largest eight brands, which include Mr Kipling and Cadbury cakes. These brought in an extra 3.4% on average.

Shares climbed by 3% to 40.6p in early trading.

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