23rd Jan 2015 08:43
LONDON (Alliance News) - Bisto gravy and Mr Kipling cakes owner Premier Foods PLC saw its shares jump Friday morning, after it said it managed to stem the sales decline of its so-called "power brands" in the final quarter of 2014, citing its highest quarterly market share in three years.
The food producer said it's seeing "positive results" from all the areas its investing in, including product launches and marketing - all of which helped rein in the pace of falling sales in the fourth quarter. The group has spent recent years restructuring and selling underperforming businesses to help it get back on track and reduce costs in the business.
Premier Foods' trading update pushed its shares up 8.7% to 39.95 pence Friday morning. The stock had touched 41.38p soon after the open.
Sales in the final three months of 2014 fell by 4.6% to GBP255.2 million from GBP267.5 million in the same period the year before. Premier Foods' so-called power brands - which include Bisto, Oxo, Sharwoods, Mr Kipling and Ambrosia - saw sales fall 3.5% in the quarter, better than the 5.1% fall they recorded in the third quarter. Support brands fell by 3.2% to GBP61 million, while non-branded food sales were down 11.5% at GBP35.6 million, bigger than the 10.3% decline in the third quarter.
"The trend in branded sales improved for the second consecutive quarter, our market share in December was the highest it's been for the last four years and we are encouraged by positive results from areas of the business in which we invested. Mr. Kipling delivered a particularly strong performance following its re-launch in the second half of 2014," said Chief Executive Gavin Darby in a statement.
Premier Foods' power brands also saw sales fall in the first half of the year and the third quarter, hit by "subdued" grocery markets.
Back in October, the group cautioned that it was expecting full-year earnings to be at the lower end of market expectations on the back of "challenging market conditions". Power brands sales in the third quarter fell by 5.1%, while non-branded goods faced a 10.3% decline.
In Friday's statement, Premier Foods said its trading profit for 2014 came in in line with expectations at GBP131 million. Its adjusted pretax profit for the year was GBP77.1 million, with adjusted earnings per share of 8.6 pence. In 2013 Premier Foods reported a GBP139.5 million trading profit.
"Over the year as a whole, we achieved a great deal to set the company up for future growth. This included a major capital restructuring to diversify and secure our sources of funding, a new organisation structure to improve our focus and agility and a further reduction in cost and complexity to help fund our investment in marketing, new products and organisational capabilities," said Darby.
Darby said the group will continue to focus on costs, trading profit and organic de-leveraging, and expects its net debt to reduce significantly in 2015.
"While the grocery market continues to evolve, we enter 2015 in a stronger position. We will continue to invest behind our innovation, marketing and category based strategies and work closely with our customers to deliver category growth," said Darby.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Premier Foods