04 August 2010

Premier Foods Half Year Results to 26 June 2010

Branded sales up 0.5 percent in value, and up 3.5 percent in volume. Read our full results here.


• Brands are trading well in tough conditions with sales up 0.5% in value and up 3.5% in volume on a pro forma basis1 for the six months to 30 June 2010
• Volume market share gains in Drive categories(2)
• Total sales down 4.5% on a pro forma basis(1) for the six months to 30 June 2010 owing to own label sales which are down 12.7%. This reflects:
  o non-branded market volumes down 5.9%;
  o wheat deflation of 2.3%; and
  o 4.5% mainly owing to contracts, primarily in bakery, which were terminated in 2009.
• Gross profit margin up 60bp reflecting product mix, procurement gains and manufacturing efficiencies
• Operating expenses down 1.6% despite higher pension, marketing and restructuring costs
• Trading profit(3) down £7m to £110m reflecting, as previously indicated, £11m of additional pension, marketing and restructuring costs
• Operating profit up £40m to £67m following the completion of exceptional integration expenditure in 2009
• Loss after tax up £17m to £40m reflecting higher mark to market losses on swap contracts
• Net debt at 26 June 2010 £1,365m, down £110m year on year

Commenting on the results, Chief Executive Officer, Robert Schofield said:

“These results reflect the actions we are taking in line with our trading strategy. Our principal brands are growing in both volume and market share and our gross margins have risen as we have improved product mix and delivered procurement gains and manufacturing efficiencies. We are controlling costs tightly and have made good progress in strengthening our cash flow and reducing debt. Today we are setting out further details of our programme to diversify and strengthen our financial structure. With the foundations of the strategy in place and delivery on track, we are looking forward to the rest of the year with enthusiasm.”

The full announcement is available below:

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Visit our Results and Presentations page to view the webcast of the analysts presentation which takes place at 9am 4 August 2010.

1. The accounting period is from 1 January 2010 to 26 June 2010. The comparative is based on 1 January 2009 to 27 June 2009. The 2010 period thus contains one fewer trading day. In order to present consistent information, we also present pro forma sales information for the 6 months to 30 June.
2. Source: IRI Infoscan, Total Grocery Outlets, 24 weeks ended to 12 June 2010.
3. Trading profit is defined as operating profit before exceptional items, amortisation of intangible assets, the revaluation of foreign exchange and other derivative contracts under IAS 39 and pension credits or charges in relation to the difference between expected return on pension assets, administration costs and interest costs on pension liabilities.


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