Success in cutting costs quicker than expected, as well as an increase in underlying half-year sales and profits, helped drive Premier Foods plc’s shares this morning (7 August).
The UK food group said it now expects to cut costs by GBP40m (US$62.5m) by the end of this year, ahead of its initial 2013 target.
The news on costs cheered the City. Premier, which has been pressured by debt in recent years, is looking to turn around the business by cutting costs and focusing on eight “power brands”.
The Sharwood’s sauces owner reported a 3.2% gain in first-half trading profit. Sales from its underlying business increased 1.1% as higher grocery sales offset a fall in revenues from bread.
Premier said its underlying business excludes results from assets sold by the end of June, sales from its milling arm and charges. Sales of its power brands were up 2%.
On a reported basis, sales fell 15.1% and operating profit dropped 40.7%. Premier’s first-half net loss was GBP40.2m. Last year, Premier booked a net loss of GBP339m but has restated last year’s net loss to GBP11.7m to reflect its own-label chilled business as a discontinued operation.
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Shares in Premier were up 3.79% at 75.25p at 09:49 this morning. Premier’s shares are up over 29% since the start of the year. The highest level the shares have reached this year is 180p.
Click here to read CEO Michael Clarke’s thoughts on the results.