Premier Reports 6.3% Sales Growth
In Baking & Milling sales were 14.4% higher in the first four months compared to the same period in 2007, due to higher prices partly offset by lower volumes. Sales volumes of Hovis stabilised during the first four months of 2008.
14/05/08 Premier’s trading performance in the first four months of 2008 was in line with our expectations. The Group achieved sales growth of 6.3%, primarily reflecting the pricing action taken to recover the cost inflation we experienced in the second half of 2007 and we are pleased to have now implemented the necessary price increases. Trading profit is also in line with expectations with, as previously indicated, the synergies from the integration of Campbell’s and RHM being broadly offset by the delay in recovering cost inflation and lower bread volumes compared to the same period in 2007.
In Grocery, sales were 2.4% higher in the first four months of 2008. Recovery of commodity cost inflation is the main driver of the sales growth with sales volumes broadly in line with last year.
In Baking & Milling sales were 14.4% higher in the first four months compared to the same period in 2007, due to higher prices partly offset by lower volumes. Sales volumes of Hovis stabilised during the first four months of 2008 and the company are pleased by the consumer response to its new Hovis white bread, which is being supported by new packaging and advertising during the second quarter of the year.
Premier said that their strategy to rejuvenate Hovis is well underway. 'We have now extended the programme to the whole of the Hovis range and we are currently developing improved recipes, improved packaging and new marketing that reflect the core values and strength of the brand. These improvements will come to market in the second half of 2008,' they reported.
Sales for Chilled & Ireland were 2.0% higher during the first four months with strong growth in sales of Quorn offset by lower retailer branded volumes.
Premier remains on track to deliver the £113m of cost savings that we identified when we acquired the RHM and Campbell’s businesses and the costs of integration also remain in line. The rationalisation of manufacturing facilities is progressing ahead of plan and, following the successful closure of two factories in 2007, the remaining seven factories in the programme are now due to close by the end of 2008.
Premier expects sales growth through the remainder of the year to continue primarily to reflect pricing movements to recover cost increases. 'As noted at the time of our preliminary results, we anticipate that progress in 2008 will be weighted towards the second half and our expectations for the year remain unchanged. Whilst we have continued to see movement in some commodity prices, our overall cost inflation to date is in line with our expectations and we are offsetting the impact of this through planned pricing and cost reduction action. We continue to monitor closely energy and oil-related costs and their impact on the general inflationary environment,' the company said.
