Premier Foods Q1 sales drop as grocery weighs

Mr Kipling and Bisto owner Premier Foods reported a drop in first-quarter sales on Thursday as grocery sales declined.

In the 13 weeks to 1 July, sales fell 3.1% compared with the same period a year ago as a good performance in sweet treats was held back by lower sales in branded grocery. Still, the company said this was in line with its expectations.

Premier said that although the grocery business saw encouraging market share gains in major retailers and some pricing benefit, the quarter was hit by lower market volumes, partly reflecting a warmer June, lower promotional effectiveness particularly in the Desserts category and a move to more normalised levels of trade investment in non-retail channels.

It was a cheerier picture for the sweet treats division, which continued to benefit from the strong performance of Cadbury cakes, while Mr Kipling returned to volume growth in the quarter as the introduction of a new gluten-free range lent a hand.

The company's international business saw sales rise 20%, with Cadbury cake in Australia continuing to grow sales, volumes and market share.

Chief executive officer Gavin Darby said: "Our first quarter sales were lower than last year, as we expected, primarily due to lower sales volumes in the grocery categories, notably desserts. At the retail level we have continued to outperform our markets and industry peers, our international business grew 20% in the quarter, and our cost savings programmes are on track.

"We expect to report positive sales growth in the second quarter, broadly flat sales in the first half and our expectations to deliver progress in the full year are unchanged."

At 0910 BST, the shares were up 0.6% to 38.97p.