Shares in Premier Foods rose more than 10% today (7 March) after an unscheduled trading update that carried an increase to the UK manufacturer’s forecast for annual profits.
The Batchelors soup maker said its annual “trading profit” and “adjusted profit before tax” are estimated to “be ahead of the board’s initial expectations”.
Premier’s current financial year runs to 1 April and it is forecasting trading profit of around GBP155m (US$185.7m) and adjusted profit before tax of approximately GBP135m. If achieved, the results would be around 10% higher year on year.
“The group has continued to trade strongly in recent weeks, bringing the momentum it delivered in quarter three into the final quarter of the year,” the Mr Kipling cakes group said.
Premier expects its fourth-quarter revenues to grow by “at least” 10% on the corresponding period last year.
It added: “The grocery business continues to lead the way, with broad-based growth and further market share gains, while sweet treats has demonstrated an improving trend.”
Meanwhile, the company said its international business “will deliver another quarter of strong sales growth”.
At 12:20 GMT, Premier’s share price was 128.6p, up 11.83%.
In a note to clients today, Jefferies analyst Martin Deboo said: “Our first take? Strong momentum appears to be continuing, with a strong inference that Premier Foods has concluded successfully its calendar year 2023 pricing negotiations. Net debt guidance is a touch above consensus, but higher EBITDA should keep leverage at 1.6 times, in line with [analyst] consensus and Jefferies estimates.”
Shore Capital, the house stockbroker for Premier, said the update “underscores our view that this is a high-quality business that is structurally undervalued”.
In a note to clients, Shore Capital’s Clive Black and Darren Shirley said: “The beat to fiscal year 2023 expectations is very welcome news to us, whilst the encouraging momentum into fiscal year 2024 supports ongoing earnings progression.”
In January, Premier set out plans to close its Knighton Foods powdered desserts and drinks factory in the UK, putting around 300 jobs on the line.