Falling sales, commodity price inflation and a decline in consumer spending meant a gloomy performance for Premier Foods last year. Profit margins were hit as price increases proved insufficient to offset higher promotional spending and retail customers drifted away to other brands. Even after adjusting for a £282m impairments charge at the struggling bread business, and group operating profit slumped 47 per cent year-on-year to £116.9m – leaving the shares with little appeal.
Still, chief executive Mike Clarke, who took the helm in September, has secured some breathing space for the group after arranging for the maturity of loan facilities to be extended from December 2013 to June 2016 – albeit at a higher rate of interest. That was one of the five objectives set out last year to turn the group around – another being a reduction in costs. Progress on that costs objective is visible, too, with projected savings having doubled to more than £40m by 2013. A further £330m of disposals is planned before end-June 2014, following the £400m of net disposals completed last year.
Panmure Gordon is cutting its 2012 estimates and expects adjusted pre-tax profit of £95m pre-tax, giving EPS of 3p.
| PREMIER FOODS (PFD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 11.5p | MARKET VALUE: | £276m | |
| TOUCH: | 11.5-11.8p | 12-MONTH HIGH: | 35p | LOW: 3p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 24p* | NET DEBT: | 174% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 2.25 | -73.5 | -8.20 | 6.50 |
| 2008 | 2.60 | -405 | -41.3 | nil |
| 2009 | 2.53 | 42.0 | 1.70 | nil |
| 2010 | 2.23 | 28.5 | -4.10 | nil |
| 2011 | 2.00 | -259 | -14.1 | nil |
| % change | -10 | - | - | - |
Ex-div: - Payment: - Includes intangible assets of £1.68bn, or 70p a share | ||||
