Premier volumes hit as prices hiked

Premier volumes hit as prices hiked

UK gravy-to-bakery manufacturer Premier Foods plc witnessed a 3.1% drop in first-quarter sales, hit by a 3.8% fall in volumes, the company said today (27 April).

Premier said that it successfully pushed through price rises to offset input cost inflation during the first quarter to the end of March.

The group revealed that raw materials and packaging costs were up in the low teens year-on-year, but insisted that it had achieved the necessary price adjustments by the end of the quarter.

While Premier predicted further input cost inflation in the remainder of the year, it suggested that a second round of price negotiations would likely see further price hikes.

"We have also made good progress on pricing. Our priority has been to obtain price rises to recover raw material inflation," CEO Robert Schofield said. "I am pleased to report that we have achieved the price rises we sought with all customers and these cover most of the raw materials inflation. However, inflation remains an issue and we will continue to seek price rises to cover this."

Nevertheless, amid the price increases and falling industry volumes, Premier said that its performance was dented by lower sales volumes. The fall reflected a strong December followed by weak demand in January and February, Premier said.

The company emphasised that sales picked up in March, with the decline in the UK grocery market closer to 2010 levels. Overall, Premier said that the value of UK grocery sales was down 2.8% with volumes down 7.1%. In March, however, the decline in UK grocery volume sales slowed to 1.6%, the company said.

The group suggested that the slow start to the year, coupled with a lag in price increases, would mean profits were weighted to the second half.

Shares in Premier were down 1.21% to 30.32 pence at 11:08 BST.