Product innovations and the subsequent marketing pushes seem to be having the desired effect at Premier Foods (PFD), whose shares rose faster than Mr Kipling cakes on results day. The stock leapt 17 per cent as analysts rushed to factor in a first-half operating profit of £23.3m, compared to a £12.8m loss for the comparable 2014 period. Chief executive Gavin Darby said the company's rate of innovation would soon be triple its level 12-18 months ago, putting it ahead of peers. And a new artisan home-baking range under the mantle of Great British Bake Off host Paul Hollywood suggests there is more to come.
The group seems unperturbed by the big supermarkets' move to focus on fewer brands as they fight falling sales. Mr Darby claimed the group most often had a "category captain" that sheltered it from the impact of brand rationalisation. This assertion seems to be supported by the first-half numbers: branded sales, which include those of Bisto and Sharwoods, saw their first quarterly increase for two years. And plans to deliver double-digit margins in the current financial year - 12 months earlier than initially expected - look achievable, given that part of its £25m capital expenditure budget will go towards cost-saving programmes.
Analysts at Shore Capital expect pre-tax profits of £87.4m, leading to EPS of 8.5p, for the year ending March 2016, compared to £83.2m and 8.9p in FY2015.
| PREMIER FOODS (PFD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 42p | MARKET VALUE: | £343m | |
| TOUCH: | 41.25-41.75p | 12-MONTH HIGH: | 48p | LOW: 30p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 86p* | NET DEBT: | 83% | |
| Half-year to 3 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 344 | -54.7 | -6.0 | nil |
| 2015 | 341 | -5.1 | 2.5 | nil |
| % change | -1 | - | -142 | - |
Ex-div: na Payment: na *Includes intangible assets of £1.16bn, or 140p a share | ||||
