What the analysts say: Premier Foods full-year results
Analysts gave a mixed view of Premier's results
Premier Foods plc this morning (21 February) saw its share price climb 4.25% as the Hovis maker booked an improvement in its underlying results. Analyst reaction, however, was mixed.
Panmure Gordon analyst Graham Jones
"Premier's results were below our expectation, but it was the H2 performance in bread which stands out as particularly disappointing. Net debt came in GBP23m higher than expected at GBP950.7m, and the IAS19 pension deficit ballooned. We are cutting our EPS forecast for 2013E from 29.4p to 25.0p on lower trading profits in bread and higher interest costs.
"We still struggle to see how Premier can materially improve its balance sheet after this year given its heavy commitment to its huge pension deficit. We wait to hear from the new CEO, but it is absolutely crucial that this year Premier delivers its targeted cost savings to the bottom line."
Shore Capital analyst Clive Black
"Simplicity is a virtue! Whilst Premier Foods is less complex than it was, it remains a bit of a minefield to reach an underlying figure for 2012A and so forecast 2013F. So, within this context we make the following observations on the group’s results:
"Clear disappointment with the departure of CEO Clarke, but pleasure at the prompt appointment of Mr. Darby, who has started robustly. The stock may recover some lost ground as the market gains exposure to his thoughts on the business. Trading profits for 2012 broadly in-line with our expectations.
"The business has worked very hard to survive and provide itself options to deliver better times, but in a still challenging trading environment, commercial life remains a slog and whilst there may be some semblance of relief today as to the progress, the nature, extent and underlying valuation of Premier Foods, alongside no dividend, means that we cannot be more positive versus its peers at this stage."
Investec analyst Martin Deboo
"FY12 trading profit is 3% ahead of our forecasts driven by lower central costs. Cash and debt is in line on a comparable basis. There are further cost savings to come in FY13. So this looks like a decent, reassuring statement in the light of the shenanigans that preceded it. But plenty of challenges remain. The trading environment is tough and marketing investment remains low by peer standards. And despite good work on disposals, leverage (inc. pensions) remains stubbornly high. Hold."
Companies: Premier Foods plc
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