Premier Foods shares soar after Mr Kipling’s owner raised its profit outlook after a strong year open
- Premier Foods expects at least a 10% increase in fourth quarter revenue
- The company now expects trading profit of around £155m for the year
- Its shares have more than tripled since the start of the coronavirus pandemic
Shares of Premier Foods jumped on Tuesday after the owner of Mr Kipling raised its profit forecast, thanks to continued strong trading since the start of the year.
The group, which also owns Angel Delight and Bisto gravy, expects fourth-quarter sales to increase by at least 10% due to strong demand for groceries, as well as strong overseas sales and l improvement in confectionery income.
This follows a stellar business performance in the previous three months, when price increases offset rising costs while failing to curb consumer spending over Christmas.
Angel Delight and Bisto sauce owner Premier Foods expect fourth-quarter revenue to grow at least 10% on another strong result from its grocery business
As a result, the company now expects a trading profit of around £155m for the financial year ending early April, equivalent to a 10% increase on the £141.2m it made in the year. last.
Shares of Premier Foods rose 12.35% to 129.2p late Tuesday afternoon, making it the second-best performer on the FTSE 350 index behind Scottish engineering specialist Wood Group.
Since the start of the Covid-19 pandemic, shares of the St. Albans-based firm 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 cooking sauces, the Nissin brand of instant noodles and Mr Kipling cakes became particularly popular with customers during this time.
Chief executive Alex Whitehouse also claimed in November that Premier Foods’ affordable ranges had seen sales boosted by cost of living pressures prompting more consumers to forgo pubs and restaurants.
Although the easing of trade restrictions has slowed the company’s growth, its profits and revenue remain well above pre-coronavirus levels.
Higher earnings have allowed the company to continue to reduce its once-high net debt, which stood at £337.7m at the start of October, after being around £470m it four years ago and £1.2bn at the start of the last decade.
On Tuesday, Premier Foods forecast net debt to be “broadly in line” with board expectations and previous year levels of £285million.
Russ Mould, chief investment officer at AJ Bell, observed that the firm was having “an extremely good time with trading”.
He added: “The company showed that recent success was not just about people being stuck indoors during the pandemic and feasting on sugary treats.
“Instead, the company is enjoying the benefits of resolving its debt issues and being able to reinvest its excess cash back into the business to make it more competitive and innovative.”
Founded as Hillsdown Holdings in 1975, Premier Foods’ portfolio also includes Loyd Grossman sauces, dried soup producer Batchelors, instant mashed potato brand Smash and custard maker Ambrosia.
