Premier Foods ' (PFD) shares rose on the back of half-year numbers, which was interesting given that its losses are widening and its inputs (dairy, wheat and sugar) have risen in sterling terms. But a painful second-quarter trading update in October had taken much of the sting out of these numbers. As expected, the grocery business was the worst performer, reporting a 12.4 per cent contraction in branded sales during the second quarter as warm weather put customers off buying products such as gravy, stocks and soups.
Despite exposure to the euro and projections for cost inflation, management is confident the company can meet full-year profit forecasts. For now, the focus is on the recent Nissin Foods tie-up: the Japanese instant noodle maker took a 17 per cent stake in Premier at the end of March from private equity group Warburg Pincus. New initiatives include extending distribution of Nissin's brands across the UK, developing a new range of products for 2017, and leveraging Nissan's foothold in the US market to improve availability of Premier's Sharwood's range of cooking sauces.
Credit Suisse still expects pre-tax profit of £82m for the year ending April 2017, giving EPS of 8p, compared with £86m and 8.3p in FY2016.
| PREMIER FOODS (PFD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 47p | MARKET VALUE: | £389m | |
| TOUCH: | 46.75-47p | 12-MONTH HIGH: | 62p | LOW: 30p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 55p* | NET DEBT: | 122% | |
| Half-year to 1 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 341 | -5.1 | 2.6 | nil |
| 2016 | 348 | -8.7 | -6.7 | nil |
| % change | +2 | - | - | - |
*Includes intangible assets of £1.13bn, or 136p a share | ||||
