Premier Foods shares soar after Mr Kipling owner hikes profit outlook
Premier Foods shares soar after Mr Kipling owner hikes profit outlook following solid opening to the year
- Premier Foods forecasts fourth-quarter turnover to increase by at least 10%
- The company now anticipates a trading profit of around £155m for the year
- Its shares have more than tripled since the coronavirus pandemic started
Premier Foods shares jumped on Tuesday after the Mr Kipling owner raised its earnings guidance, thanks to continued strong trading since the start of the year.
The group, which also owns Angel Delight and Bisto gravy, forecasts fourth-quarter turnover to grow by at least 10 per cent due to strong grocery demand, as well as high overseas sales and improving confectionery revenues.
This follows a bumper trading performance in the previous three months when price hikes offset rising costs whilst failing to dent consumer spending over Christmas.
Angel Delight and Bisto gravy owner Premier Foods forecasts fourth-quarter turnover to grow by at least 10 per cent due to another strong result from its grocery business
As a result, the company now anticipates a trading profit of around £155million for the financial year running to the start of April, equivalent to a 10 per cent rise on the £141.2million made last year.
Premier Foods shares had risen by 11.65 per cent to 128.4p just before close on Tuesday, making them the second-best performer on the FTSE 350 Index behind Scottish engineering specialist Wood Group.
Since the Covid-19 pandemic began, the St. Albans-based firm’s shares have more than tripled in value as the temporary closure of hospitality venues for much of 2020 and 2021 encouraged more people to cook meals at home.
Products like Sharwood’s cooking sauces, instant noodle brand Nissin, and Mr Kipling cakes have become particularly popular with customers during that time.
Chief executive Alex Whitehouse also claimed in November that Premier Foods’s affordable ranges have seen their sales boosted by cost-of-living pressures spurring more consumers to forego pubs and restaurants.
Though loosened trading restrictions have slowed the company’s growth, its profits and revenues remain significantly above pre-coronavirus levels.
Higher revenues have enabled the business to continue slashing its once-high net debt pile, which stood at £337.7million as of early October, having been about £470million four years ago and £1.2billion at the start of the last decade.
On Tuesday, Premier Foods forecasted its net debts to be ‘broadly in line’ with the board’s expectations and prior year levels of £285million.
Russ Mould, investment director at AJ Bell, observed that the business was experiencing ‘an exceedingly good time with trading.’
He added: ‘The company has shown recent success wasn’t simply down to people being stuck indoors during the pandemic and feasting on sweet treats.
‘Instead, the company is enjoying the benefits of sorting out its debt problems and being able to reinvest spare cash back into the business to make it more competitive and innovative.’
Founded as Hillsdown Holdings in 1975, Premier Foods’s portfolio also includes Loyd Grossman sauces, dried soups producer Batchelors, instant mash potato brand Smash and custard maker Ambrosia.