Sluggish growth as Premier Foods takes position
acquisitions strengthened total grocery sales but failed to bolster
like-for-like sales growth.
Following a year of re-structuring, the manufacturer famous for iconic British brands Sarson's Vinegar and Branston pickle, said it expects total sales from continuing operations for the year-end to be up 15 per cent.
But this translates to a 2 per cent like-for-like sales growth once acquisitions are stripped out. And the figure is set to drop to 1 per cent after adjusting for damages relating to the 2004 fire at its Bury St. Edmunds factory.
Premier Foods CEO Robert Schofield said: "We were looking to offset the exceptional level of inflation in energy costs through price rises and we are pleased to have achieved a satisfactory level of cost recovery. The impact on sales of exceptionally mild autumn weather has been compensated for by healthy Christmas trading."
The year was marked by a series of acquisitions and sell-offs that have seen the balance sheet fluctuate as the company positions itself in the growth areas of healthy eating, meat-free and quality desserts.
Driven by Premier's acquisition of the popular Bird's brand last February, sales in the spreads, desserts and beverages division are now expected to be significantly higher than last year's £246.9m.
But like-for-like sales from the convenience foods, pickles and meat-free division will remain in line with 2004's £347.5 million, as newly acquired Quorn and Cauldron Foods are consolidated into the business.
"The acquisition and disposals we have made during the year have strengthened our portfolio and taken the share of our grocery sales from branded products to over 60 per cent," Schofield said.
"They have also moved our portfolio into higher growth categories and we are well placed to take advantage of the increased trend for healthy eating."
In November the company paid £27m for Bristol-based Cauldron Foods in a bid to reinforce its position as the leading producer of meat substitutes in the UK, following on from the June acquisition of Quorn for £172m.
Premier Foods, which has an annual group turnover of £800m, can now expand its portfolio to tofu, vegetarian ready meals, fresh pates and ethnic snacks, which Cauldron and Quorn used to supply to the UK's major supermarkets.
Overall, the manufacturer expects year earnings before interest, tax and amortization of intangible assets (EBITA) to be within its range of expectations, as the firm embarks on another busy year of restructuring.
