Punters have backed Premier Foods’ (PFD) focus on branded products by increasing sales for that segment during the first half, against a weak performance for non-branded items.
While labels such as Nissin and Mr Kipling brought in more revenue, the company’s non-branded offerings were flat in the grocery sector and precipitously down in the ‘sweet treats’ division, which suffered a sales fall of more than a quarter year on year to £11m. Premier said it would focus on “building its brands”, which offer higher-margin products.
The company is in a transitional period, with a new chief executive, in addition to three further new members of management and a strategic review under way. Operating profit increased by 8 per cent to £36m, despite the review spending and a payout for former acting chief executive Alastair Murray, who left at the end of August, cost the group £1.5m. The company’s hefty net debt was flat compared with 30 March at £471m, excluding lease liabilities. Shore Capital analysts Clive Black and Darren Shirley said “moribund” Premier’s strategic review would have to be impressive to outweigh the focus on the debt pile and pension responsibilities.
Consensus estimates compiled by Bloomberg forecast full year revenue of £841m and earnings per share of 4.9p, rising to £858m and 5.3p in the 2021 financial year.
| PREMIER FOODS (PFD) | ||||
| ORD PRICE: | 36p | MARKET VALUE: | £305m | |
| TOUCH: | 36-36.2p | 12-MONTH HIGH: | 41p | 29p |
| DIVIDEND YIELD: | na | PE RATIO: | na | |
| NET ASSET VALUE: | 136p* | NET DEBT: | 41%** | |
| 26 weeks to 28 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 358 | -2.2 | -0.1 | nil |
| 2019 | 367 | 15.0 | 1.5 | nil |
| % change | +2 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £998m, or 118p a share **Excludes lease liabilities of £22.2m | ||||
