Premier Foods today (7 August) reported soaring first half profits, with profit before tax increasing by 123.2% year-on-year from GBP12.5m (US$23.86m) to GBP27.9m, boosted by healthy trading in its core grocery business and the first full half of contributions from its Quorn and Cauldron units.
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Chief executive Robert Schofield said: “We are delighted with the performance of Quorn where the additional marketing investment we have put behind the brand has resulted in double-digit sales growth.”
Total sales from continuing operations increased by 18.4% to GBP430.5m and operating profit from continuing operations increased by 12.7% to GBP41.7m.
Sales of Convenience Foods, Pickles, Sauces & Meat-Free increased by 30% to GBP225.5m. Sales of Premier’s Spreads, Desserts & Beverages product group increased by 6.9%, driven by the strong performance of Ambrosia and Hartley’s brands. Fresh Produce sales increased by 9.8% to GBP64m, due to the inclusion of Gedney’s, which was acquired in September 2005.
Operating profit from continuing operations was up 12.7% to GBP41.7m and trading profit, which Premier defined as operating profit before exceptional items, amortisation of intangible assets and the foreign exchange, increased by GBP10.0m, or 26.6%, to GBP47.6m. The rise was driven by the GBP8.8m contribution from Quorn and Couldron businesses and an increase in profit for its core grocery businesses of GBP2.4m.
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By GlobalDataMarketing expenditure increased by 17% to GBP17.7m, with an increased spend behond the Quorn brand.
Premier said that the trading profit margin increased to 11.1% from 10.3% during the half.
With an acquisitive policy, Premier has orientated its business towards brands with brands accounting for 61% of grocery sales. This is due to both the inclusion of Quorn and Couldron and organic growth of Premier’s portfolio.
Premier is in the midst of completing a GBP460m deal with the Campbell Soup Company for its UK and Irish businesses, including brands such as Oxo, Homepride and Batchelors.
“We are very excited by the proposed acquisition of Campbell’s UK and its portfolio of iconic British brands and look forward to taking full control of the business and beginning its integration into Premier over the second half,” Schofield said. The company has also expressed interests in further acquisitions, and is said to be eyeing United Biscuits.
“The outlook for the remainder of the year remains in line with our expectations, with our branded sales performance helping to offset the utility and energy-related cost pressures we are seeing in the supply chain,” Schofield said.
