Premier Foods plc has reported an increase in first-half profits boosted by lower costs and raised its full-year expectations.
Underlying business trading profit increased by 50.2% in the six months to the end of June to GBP47.4m (US$72.9m), predominantly driven by lower SG&A costs of GBP20m, the UK food maker reported today (23 July).
Premier said it now expects full-year trading profit to be around the top of market expectations.
Total underlying business sales, however, were down 0.9% at GBP621.2m compared to the first half of 2012. This included a 1% decline in grocery sales owing to a decrease in non-branded sales.
Branded grocery sales increased by 1.3% to GBP343.8m, driven by a 4% increase in what Premier calls its “power brands”, which include Sharwood’s cooking sauces and Batchelor’s soup.
Sales for Premier’s bread division increased by 8.2% to GBP355.9m in the half year, while sales excluding milling declined 0.7% to GBP240.6m in the period.
Chief executive Gavin Darby said Premier had issued “very encouraging results” given the “highly competitive environment”.
“This shows that our turnaround strategy is delivering at the bottom line. We have now grown sales in our grocery power brands for six consecutive quarters as we continue to build partnerships with our customers, deepen our understanding of consumers and invest more effectively in supporting our brands.”
Darby said the second half will see further plans to grow its power brands, in addition to a new GBP10m of cost savings that it has now identified from its efforts to “reduce complexity”.
Click here for coverage of Premier’s media conference, in which Darby explained how the company planned to work with suppliers.
Click here for a round-up of what City analysts made of the results.
Click here to view the full earnings release.