com:20091015:RnsO8010A
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RNS Number : 8010A  
  
Premier Foods plc  
  
15 October 2009  
  
Premier Foods plc ("Premier")   
  
15 October 2009  
  
Interim Management Statement for the 13 weeks to 26 September 2009   
  
("third quarter")  
  
Branded Sales Momentum Continues  
  
 
 * Total Branded sales up 6% in third quarter reflecting volume growth 
 * UK Grocery branded sales up 4%in third quarter 
 * Sales of Hovis branded bread up 22% in third quarter   
  
 
 * Group sales excluding bulk flour up 2% in third quarter(up 5% in first nine 
months) 
 * Group sales up 1% in third quarter (up 3% in first nine months)  
  
 
 * Expectations for the full year remain unchanged  
  
Robert Schofield, Chief Executive, said:  
  
"We are pleased by the progress that the business has made in a tough trading 
environment. Our brands continue to perform well; across the Group their growth 
rate has increased from 5% in the first half to 6% in the third quarter as 
volume growth has accelerated. We have also exited some low margin retailer 
brand contracts, which, whilst reducing overall sales growth, has improved our 
branded mix.  
  
"Additionally, our brands have continued to take market share through a 
combination of innovation and advertising, supported by strong promotional 
campaigns. Hovis has consolidated its market share gains and the division is now 
benefiting from the branded sales growth achieved over the last year.  
  
"I am pleased to welcome Jim Smart to Premier Foods as Group Finance Director. 
His wide experience will prove invaluable to the Group.  
  
"As we enter the important Christmas trading period, in what is a competitive 
environment, we remain confident of achieving adjusted profit before tax for the 
full year within the range of market expectations."  
  
1  
  
 
  Premier Foods plc                            +44 (0) 1727 815 850  
  Andrew Peeler, Interim Finance Director                            
  Gwyn Tyley, Director of Investor Relations                         
  Richard Godden, Investor Relations Manager                         
                                                                     
  Maitland                                     +44 (0) 20 7379 5151  
  Neil Bennett                                                       
  Brian Hudspith                                                     
  Emma Burdett                                                       
  
  
Introduction  
  
Group sales, excluding bulk flour, were 2% ahead in the third quarter and 5% 
ahead in the first nine months, compared to the prior year. Total Group sales 
increased 1% in the period and 3% in the first nine months.  Our brands continue 
to perform well; across the Group their year-on-year sales growth rate increased 
from 5% in the first half to 6% in the third quarter as branded volume growth 
accelerated. Retailer brand sales were down 8% in the quarter, primarily due to 
lower sales of bread and bulk flour. Overall sales volume and mix for the Group 
was flat with the increased branded volumes being offset by the lower volumes of 
retailer brand products.  In line with our stated strategy of focusing on 
branded growth, the branded mix of Group sales increased by 2 ppts to 63%.   
  
Grocery  
  
Sales for the Grocery division for the third quarter were 2% ahead of the same 
period last year and 5% ahead in the first nine months. In the UK, branded sales 
were up 4% against the third quarter last year primarily due to increased 
volumes as we continued to support our brands.  However, following the exit from 
a number of low margin retailer brand contracts in the quarter, overall volumes 
for the UK were flat year-on-year. The higher level of sales growth due to price 
rises seen in the first half of the year has moderated in the third quarter as 
we cycled the price rises achieved in 2008.  
  
As previously reported, the grocery market in Ireland has been difficult this 
year. Sales for our business in Ireland in the third quarter were 14% below the 
same period in 2008.   
  
Hovis  
  
Sales of Hovis branded bread for the third quarter were up 22% on the same 
period last year.  We saw a significant decrease in retailer brand bread volumes 
as we elected to exit certain unprofitable contracts during the period. As a 
result, total sales in our baking business increased by 3% in the third quarter. 
The branded mix of our baking business showed a significant improvement with 72% 
of sales now branded, up from 63% in the same period last year.    
  
Bulk flour sales declined due to lower wheat and wheat feed prices. Consequently 
total sales for the division for the third quarter were 2% lower than the same 
period last year.  
  
Hovis has maintained its strong market share performance through the third 
quarter, reaching 26.2% for the 12 weeks ending 5 September 2009, compared to 
22.8% for the equivalent period last year. Investment in the Hovis brand 
continues with the recent introduction of a new Farmhouse soft white loaf. We 
are also pleased to be supporting The Royal British Legion's Poppy Appeal this 
year through sales of Hovis Seed Sensations.  
  
Chilled  
  
In our Chilled business, sales for the third quarter increased by 1% on the 
comparable period in 2008, with sales for the first nine months up by 5%.  Sales 
growth of Quorn improved in the period, although profitability was held back by 
the previously reported additional manufacturing costs, which are being 
addressed.  Our retailer brand chilled ready meal and cake business is trading 
in line with our expectations.   
  
Transformation Programme  
  
The transformation programme following the acquisitions of Campbell's and RHM is 
now substantially complete although a small level of investment remains as we 
continue to improve operational efficiencies in the manufacturing sites and 
expand the scope of the new Group shared service centre.  
  
Financial Position  
  
Our financial position is broadly unchanged since the half year aside from 
normal trading cash flows. We expect good cash generation in the second half 
reflecting the typical seasonality of our business. We continue to focus on cash 
generation to reduce net debt.  
  
Trading Outlook  
  
As we enter the important Christmas period, in what is a competitive 
environment, we believe our brands are well placed to continue to benefit from 
the coordinated programmes of innovation, advertising and promotional activity 
that have driven growth this year. We remain confident of achieving adjusted 
profit before tax for the full year within the range of market expectations1.  
  
A conference call will be held for analysts and investors today at 8:30am.  
  
Conference call details:  
  
Telephone numbers:  
  
 
  UK Callers              0808 109 0700     
  International Callers   +44 20 3003 2666  
  No pin number                             
  
  
1. The range of market expectations, as reported by Reuters, for adjusted profit 
before tax for 2009 is £162m-£186m.  
  
Certain statements in this trading update are forward looking statements. By 
their nature, forward looking statements involve a number of risks, 
uncertainties or assumptions that could cause actual results or events to differ 
materially from those expressed or implied by those statements. Forward looking 
statements regarding past trends or activities should not be taken as 
representation that such trends or activities will continue in the future. 
Accordingly, undue reliance should not be placed on forward looking statements.  
  
Notes for editors  
  
Premier Foods is the UK's largest food producer, which manufactures, distributes 
and sells a wide range of branded and retailer branded foods. We supply a broad 
range of customers including the major multiple retailers, wholesalers, 
foodservice providers and other food manufacturers. Premier owns iconic British 
brands such as Hovis, Mr. Kipling, Batchelor's, Quorn, Bisto, Ambrosia, 
Sharwood's, Branston, Oxo, Hartley's and many more. The business employs around 
16,000 people and operates from over 60 sites across the UK and Ireland.  
  
 
This information is provided by RNS  
  
The company news service from the London Stock Exchange  
  
  END  
  
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