Premier Foods Reports Higher Sales in 2009

Branded sales during the year were helped by strong growth of its top brands with especially strong performances by Ambrosia and Hartley’s in desserts Loyd Grossman and Homepride in cooking sauces, Branston beans and relishes and Batchelor’s soup and noodles.

14 Jan 2010 --- Premier Foods has reported good progress in 2009, and expects to report encouraging branded sales growth of 6.4% and market share gains in its key branded categories. “We expect to announce total sales for 2009 of £2,661m, up 2.2% on 2008, with branded sales for the year of £1,678m representing 63% of total Group sales compared to 61% in 2008. Sales in Q4 were up by 1.5% on Q4 2008 with branded sales up 7.0%,”the company said in a statement.

The company expects to report Trading profit of around £320m, an increase of approximately 3.5% on 2008 and net regular interest of around £155m. Adjusted Profit before tax is expected to be around £165m. Subject to completion and audit the company expects to report the following results for the fourth quarter and year as a whole:

Grocery has made good progress in line with its strategy of driving branded sales. The sales growth trends in Q4 have improved on those seen in Q3 with year on year branded sales growth accelerating to over 8%.

Branded sales during the year were helped by strong growth of its top brands with especially strong performances by Ambrosia and Hartley’s in desserts Loyd Grossman and Homepride in cooking sauces, Branston beans and relishes and Batchelor’s soup and noodles. As a result, the company has taken market share in its key branded categories.

Retailer brand sales in Q4 were down by 5.3% on the same period in 2008. This is a continuation of the trend in Q3 where the impact of a decline in retailer brand’s market share and the exit from a number of low margin contracts has reduced volumes year on year but this has been partially offset by pricing and better mix.

The company reported an improved performance in Ireland during the second half of the year. The decline in sales seen earlier in the year has been significantly reduced and brands are gaining market share. The Irish grocery retail sector has continued to adapt to the difficult economic environment with a substantial increase in sourcing directly from the UK coupled with a move to more centralised distribution.

The sales and market share growth in the company’s Grocery business has been achieved against a backdrop of significant year on year increases in input costs reflecting market price increases in many of our raw materials in 2008 and early 2009. We have largely offset this cost inflation by pricing and better procurement. The amount of promotional activity across the industry has increased and this, together with our strategy to drive branded growth, led to an increase in our promotional costs. The net effect of input cost inflation, pricing, procurement and promotions left gross margin percentage down year on year. As a consequence of the strong sales growth, the lower gross margins and increased marketing expenditure, the company expects to report Grocery Trading profit in line with 2008.