Premier Foods sales and profit drop in 'challenging' year

Premier Foods reported a drop in sales and profit for the year to 1 April on Tuesday as it highlighted a "challenging" year and said it was changing its strategy to focus more on cost efficiencies and cash generation.

The maker of Mr Kipling cakes said underlying pre-tax profit fell 11.8% to £74.2m, on underlying sales of £790.4m, down 1.4% from the previous year as the company pointed to the return of food inflation.

Meanwhile, underlying trading profit declined to £117m from £129.1m the year before and net debt reduced to £523.2m from £534.2m.

Chief executive officer Gavin Darby said: "This financial year has been a challenging one for the industry, with the return of food inflation and changing retailer promotional strategies. Despite this, we have grown market share in six of our eight largest brands, outperformed many of our peers in the latter part of the year and accelerated international sales growth to 18%. We have continued to invest in brand innovation and marketing, our customer relationships remain strong and we recently agreed a £32m reduction in cash payments to our pension schemes over the next three years."

Premier said it has updated its strategy to give an equal focus to revenue growth, cost efficiencies and cash generation, adding that it expects its recently-announced cost savings programme to deliver £20m over the next two years.

Darby said this year has kicked off on a solid footing and the company plans to deliver progress, although this is likely to be weighted more to the second half.

In a trading update back in January, Premier had warned that profit expectations for the year were around 10% lower than previously anticipated, partly due to food inflation.

At 0945 BST, the shares were down 2.2% to 42.04p.