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Premier Foods third-quarter sales up 4%, strategic partnerships help
Premier Foods reported a rise in third-quarter sales on Tuesday, although Cadbury cake sales dropped in the UK and sales of Mr Kipling cakes also declined.
Group sales rose 4% in the third quarter and 2.6% in the first three quarters of the year, with branded sales up 0.7% in the quarter and non-branded sales 17% higher, reflecting the robust performance of the UK food market and Premier's strategic partnerships.
Total sales in the grocery business were up 4.8% in the period, with growth in both the branded and non-branded parts of the portfolio. Branded sales were up 3.4% and non-branded sales rose 13.9%, the latter mainly due to continued growth from existing contracts and new business wins, notably in Stuffing.
The Batchelors brand delivered its fourth successive quarter of sales growth thanks to the continued benefits of the strategic partnership with Nissin, while sales and volumes of Bisto and Oxo grew in the quarter.
International sales rose 26% in the quarter, reflecting continued strong progress in Australia, the launch of Mr Kipling and Cadbury cake in New Zealand and a number of new customer listings for Sharwood's in Europe and the USA.
Sales of Cadbury cakes continued to grow strongly in international markets but fell in the UK following short-term capacity constraints and a move to more optimal promotional activity compared to the same period a year ago. Sales of Mr Kipling cakes also fell, again following a move to more optimal promotional activity.
Chief executive Gavin Darby said: "Our International business produced another excellent quarter and our partnerships with Nissin and Mondelez International continue to deliver strong performances, demonstrating their strategic benefits to us. With our leading category positions and commitment to product innovation, our expectations for progress this year remain unchanged."
The group's expectations for progress in FY17/18 remain unchanged. Net debt at the year-end is expected to be lower than the prior year, with the rate of deleveraging on track to accelerate in future years as Premier pursues its target of reducing net debt/EBITDA to below 3.0x.
At 1020 GMT, the shares were up 4.1% to 44.50p.