5th Jan 2005 07:00
Premier Foods plc05 January 2005 Premier Foods plc ("Premier") Trading update for the year to 31 December 2004 Operating profits and margins firm and 2004 EBITA(1) anticipated to be within the range of market expectations. Positive outlook for 2005. Premier, one of the leading suppliers of ambient grocery products in the UK, isproviding the following update for the year ended 31 December 2004, ahead of itspreliminary results announcement on 2 March 2005. We expect total reported grocery sales for the year, including a full year'scontribution from Ambrosia, to be up by approximately 8%. Operating profits andmargins are anticipated to be within the range of market expectations. Although Christmas sales were slower than expected, after taking into accountthe estimated effect of the Bury St Edmunds fire and the associated disruption,like-for-like grocery sales would have been up by over 1%. The fire effectivelyremoved two of our most dynamic growth brands for the last 10 weeks of the yearand as a consequence of these lost sales, we expect to show like-for-likegrocery sales broadly flat. Robert Schofield, Premier Foods plc CEO, said: "2004 was a tremendously exciting year for Premier with the IPO, and asignificant acquisition. On the downside we had a serious fire at our Bury StEdmunds factory. Nonetheless, we expect to produce a sound set of results and weenter 2005 with our business, brands and trading plans in good shape to deliverongoing growth". Convenience Foods, Pickles and Sauces Sales for this division are anticipated to be slightly behind 2003's reportedsales of £374.6m, as a result of the fire and associated disruption at our BurySt Edmunds plant in October 2004, which is estimated to have reduced sales byapproximately £10m. Without this reduction, we anticipate sales for thisdivision would have been ahead of last year. While discussions to finalise thedetailed insurance claim continue, our estimate of the profit impact on theresults for 2004 remains limited to the £1m excess on the group's insurancepolicy. Some manufacture of Branston Pickle resumed in November 2004 with Loyd Grossmanand other sauce and pickle products recommencing production in December 2004.The team at the Bury St Edmunds factory are making excellent progress and weexpect the site to be back to full output by the end of February 2005. As indicated at the time of the interim announcement, we have seen a significantincrease in the price of tin plate, our single largest raw material input.However, we have been able to agree price increases for our canned products withour customers to cover a significant proportion of the increased input costs. Tea and Beverages Sales for this division are expected to be slightly behind 2003's reported salesof £143.0m, due to lower retailer brand sales. The transfer of production fromEdinburgh to the Moreton factory has been successfully completed and full yearsavings from this rationalisation are still forecast to be approximately £1.0mper annum. Spreads and Desserts Sales for this division of £120.4m in 2003 included one month's contributionfrom the Ambrosia business. The Ambrosia business acquired in December 2003, hastraded in line with expectations during the year and ahead of 2003.Like-for-like sales, which exclude Ambrosia, are anticipated to be ahead of lastyear. Following our recent agreement for the acquisition of the Bird's and AngelDelight dessert brands, which we announced on 16 December 2004, we are workingclosely with Kraft to facilitate the transfer of sales and distribution for thenewly acquired business. This is planned to take place on completion of the dealon 13 February 2005. Staged transfer of production facilities for these brandswill take place over the balance of the year. Potatoes Sales for this division are anticipated to be ahead of 2003's reported sales of£135.8m as a result of higher market prices. As we indicated at the time of ourinterim announcement, trading has improved during the second half of the yearand we are seeing some benefit from the closure of two of its six packingfacilities. However, we continue to see a competitive environment with continuing supplierrationalisation among the major retailers expected in 2005 and accordingly weare continuing to review the future shape and strategy of the business. Preliminary results for the year ended 31 December 2004 will be announced on 2March 2005. We will host a presentation to analysts at 9am at ABN Amro, 3rdfloor Conference Suite, 250 Bishopsgate, London, EC2M 4AA. (1) Earnings before Interest, Tax and Amortisation of Intangible Assets Enquiries: Paul Thomas, Finance DirectorGwyn Tyley, Investor Relations ManagerPremier Foods plc Tel: 01727 815 850 Michael BerkeleySara BatchelorAnthony KennawayCitigate Dewe Rogerson Tel: 020 7638 9571 Notes to Editors Premier Foods plc is a leading UK manufacturer and marketer of shelf-stable or"ambient" grocery products and one of the largest suppliers of grocery productsin the United Kingdom. Premier manufactures and markets grocery products for theretail grocery and out of home channels in three principal product segments:• convenience foods, pickles and sauces;• tea and beverages; and• spreads and desserts.Premier also operates a potato packing and marketing business in the UnitedKingdom, supplying the retail grocery, out of home and food manufacturingchannels. Premier's branded products include Ambrosia custard and milk puddings, Branstonpickles, Typhoo tea, Hartley's preserves, Gale's honey and lemon curd, Crosse &Blackwell convenience foods, Sun-Pat peanut butter, Sarsons vinegar, Haywardspickles, Smash instant mashed potato, Marvel powdered milk creamer and Waistlinesalad dressings, soups and cooking sauces. In addition, the Company producesCadbury cocoa-based beverages, HP convenience foods, Rowntree's jelly and LoydGrossman cooking sauces, soups and salad dressings under agreement or licence.Premier also produces a range of retailer brand products, principally for themajor multiple retailers. Premier Foods was floated on the London Stock Exchange in July 2004 when Hicks,Muse, Tate & Furst sold 80% of its investment in Premier. In October 2004 Hicks,Muse, Tate & Furst sold their remaining 20% holding. Premier's current marketcapitalisation is £676 million (at market close on 4 January 2005). 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