Premier Foods plc has booked a 5.4% fall in revenue for the second quarter of its financial year, with the UK group saying the warm weather in September hitting categories such as gravy mixes and desserts.
For the 13 weeks to 1 October, sales fell to GBP172.5m (US$211.5m), dragging down the group first-half sales, which fell 1.8%.
The second-quarter decline was especially marked in the gravy and stocks category, where sales were down 13% year-on-year, and the desserts category, which saw sales drop 9%. The results more than offset rising sales from Premier’s sweet treats and international divisions, units the company said “performed well” in the period, up 6% and 13% respectively.
In all, Premier said its grocery branded sales were “materially lower than expected”, down 9.5% in total during the second quarter.
“We are disappointed that our grocery business reported materially lower sales in the quarter due to warmer weather; particularly in September,” CEO Gavin Darby said.
First-half trading profit is expected to be “slightly lower” than the prior year but Premier said “careful management of costs” meant that its profit expectations for the full year remain unchanged.
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“We remain very confident in our strategic progress, our customer relationships are strong and we have an extensive new product innovation programme planned for the balance of the year. We expect group sales to grow between 2-4% in the second half of the year and our profit expectations for the full year remain unchanged,” Darby predicted.
Premier’s first-half sales performance would place full-year growth in a 1-2% range, down from the company’s previous 2-4% goal, Jefferies analyst Martin Deboo noted this morning.
Deboo described the warm weather as “an ill warm wind that has undone some patient building”. Premier has been working to strengthen its sales and profit performance by increasing its focus on branded products.
Deboo noted: “The signals that Premier Foods was moving on in a positive direction have been mounting: a string of positive quarters; Q1 sales in line with guidance; a positive capital markets day; a clever hedge protecting the pension liability from low bond yields. Now management are obliged to take their foot off the marketing gas, reflecting and reminding of the realities of a still-tight investment and cashflow envelope.”
Shares in Premier were down 11% at 46.5p at 09:26 BST this morning.