22nd Jul 2014 09:03
LONDON (Alliance News) - Premier Foods PLC Tuesday said its interim underlying business trading profit increased by 2.1%, but reported a 6.1% decline in sales due to challenging market conditions.
Premier Foods is going through a transformation after being saddled in recent years by a massive debt pile and rising interest costs, and as some of its diverse range of food businesses underperformed. In the past two years, it has restructured its milling unit and sold other non-performing business such as sweet pickles, table sauces, jellies and sweet spreads.
In January, it spun off its bread business into a new joint venture with The Gores Group. The new joint venture includes the Hovis, Mothers Pride, Ormo, Granary and Nimble brands.
In a statement, Premier Foods said it made a GBP48.1 million trading profit in its underlying business in the first six months of 2014, up from GBP47.1 million in the corresponding period of 2013. However, underlying sales fell to GBP364.4 million, from GBP387.9 million.
Its pretax loss widened to GBP54.9 million, from GBP15.8 million, due to impairment costs, the write-off of financing costs, and the non-repeat of a positive movement in fair valuation of interest rate financial instruments. Total revenue fell to GBP364.7 million from GBP393.5 million, while gross margins were also down. Administrative costs increased to GBP82.3 million from GBP69.2 million.
The company, whose underlying business basis results exclude the results of businesses it has recently disposed, left its trading profit expectations for the full-year unchanged.
"We are adapting quickly to the changing external environment through retaining a tight control of costs and margins and have a strong programme of consumer marketing and new product introductions planned for the second half of the year. Assuming normal weather patterns, we expect an improved second half branded sales performance and our trading profit expectations for the year remain unchanged," Chief Executive Gavin Darby said in a statement.
The CEO said that Premier Foods remains convinced of the medium and long-term potential for its brands, which include Mr Kipling cakes and OXO, to deliver profitable growth.
Premier Foods shares were Tuesday quoted unchanged at 46.50 pence.
By Samuel Agini; [email protected]; @samuelagini
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