Premier Foods’ Hovis Milling and Bakery division saw sales increase across branded lines, despite a “markedly tougher” third quarter for the firm.
Hovis’ branded bakery sales increased by 1.2% for the three months to 30 September 2010 – up 1.1% in its bakery arm and 3.9% within milling, compared to Q3 in 2009.
However non-branded sales were down 18.4%, which hit total group sales, and reflected the firm’s withdrawal from a number of own-label contracts in bread “and the general decline of the own-label market”.
Branded bakery sales stood at £95m, while non-branded fell to £32m in the third quarter. Sales in its milling arm hit £6m – branded, and £37m – non-branded.
In comparison to 2009, the Hovis division has seen a year-to-date sales increase of 0.4% for its branded lines, and a 21.1% drop in sales of non-branded products.
“The Hovis brand continues its progress, with year-on-year sales value growth of 1.8% and volume growth of 9.5%, supported by promotional activity, increased distribution outside of the major multiple retailers and sales of our new ‘Hearty Oats’ loaf,” according to the firm’s latest financial statement.
“Following constructive discussions with leading retailers, we have completed our repricing, in both Grocery and Hovis to recover the sharp rise in wheat prices,” commented chief executive Robert Schofield. This is despite the revelation, reported in British Baker (22 October), that Tesco had delisted more than 10 Hovis lines following a dispute over price increases.
The firm also announced it had signed an extended licensing agreement with Kraft for Cadbury Cakes, and said it continued to reduce net debt, and was on track to generate “at least £100m of recurring cashflow for the year as a whole”.