Cooking sauces, gravy and baking ingredients are back in vogue, with people cooking up a storm during lockdown. It follows that Premier Foods (PFD) expects first-quarter revenues for the current year to soar by about a fifth. Management also reckons that sales and trading profit for the full 12 months will now exceed prior forecasts. The market lapped up the good news, driving the group’s shares up by more than a tenth in response.
Revenues for the year to March 2020 were bolstered by a 3.6 per cent uptick in the final three months – with branded business sales climbing by 5 per cent. It helped that two years after relaunch, ‘Mr Kipling' – the group’s biggest brand – achieved its highest ever annual sales, delivering 4 per cent growth. In turn, Premier moved well into the black, posting positive earnings figures.
Excluding lease liabilities, net debt contracted by 13 per cent to £408m. This meant that the net-debt-to-cash-profits multiple edged down from 3.2 times to 2.7, beating bosses’ target of 3. Meanwhile, as announced back in April, Premier Foods has reached an agreement to merge all its UK defined benefit pensions schemes under one trust. This deal, which the group believes could significantly reduce future funding requirements, is set to be implemented on 30 June.
Broker Shore Capital has lifted its expectations for FY2021 and now expects trading profit of £140m, from £136m previously.
| PREMIER FOODS (PFD) | ||||
| ORD PRICE: | 67.8p | MARKET VALUE: | £ 575m | |
| TOUCH: | 67.5-67.8p | 12-MONTH HIGH: | 69p | LOW: 18p |
| DIVIDEND YIELD: | nil | PE RATIO: | 12 | |
| NET ASSET VALUE: | 198p* | NET DEBT: | 26%** | |
| Year to 28 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 772 | -13.0 | 4.1 | nil |
| 2017 | 790 | 12.0 | 0.7 | nil |
| 2018 | 819 | 20.9 | 0.9 | nil |
| 2019 | 824 | -42.7 | -4.0 | nil |
| 2020 | 847 | 53.6 | 5.5 | nil |
| % change | +3 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
*Includes intangible assets of £987m or 116p a share **Includes lease liabilities of £21.5m | ||||
