Premier Foods shares soar after Mr Kipling owner hikes profit outlook
Premier Foods shares skyrocket after Mr Kipling’s owner raises earnings forecast following a solid start to the year
- Premier Foods forecasts fourth quarter sales growth of at least 10%
- The company now expects a trading profit of around £155 million for the year
- Shares have more than tripled since the start of the coronavirus pandemic
Shares of Premier Foods rose on Tuesday after Mr Kipling’s owner raised his earnings forecast on the back of continued strong trading since the start of the year.
The group, which also owns Angel Delight and Bisto jus, expects sales to grow by at least 10 percent in the fourth quarter due to strong demand for grocery items, as well as high foreign sales and improving confectionery revenues.
This follows an excellent trading performance over the past three months, as price increases offset rising costs, while consumer spending fell short over the Christmas period.
Premier Foods, owner of Angel Delight and Bisto gravy, expects sales to grow at least 10 percent in the fourth quarter on the back of another strong performance from its grocery business
As a result, the company now expects a trading profit of around £155m for the financial year running to early April, representing a 10 per cent increase from £141.2m last year.
Premier Foods Stocks was up 11.65 per cent to 128.4 pence just before the end of Tuesday, making them the second best performer on the FTSE 350 Index behind Scottish technical specialist Wood Group.
Shares of the St. Albans-based company have more than tripled in value since the start of the Covid-19 pandemic, as the temporary shutdown of catering outlets for much of 2020 and 2021 encouraged more people to cook at home.
Products such as 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 sales of Premier Foods’ affordable ranges were boosted by cost-of-living pressures, driving more consumers away from pubs and restaurants.
While loosened trade restrictions have slowed the company’s growth, earnings and revenues remain significantly above pre-coronavirus levels.
Higher revenues have enabled the company to continue to reduce its once-high net debt, which stood at £337.7m at the start of October, around £470m four years ago and £1.2bn at the start of the year. past decade.
On Tuesday, Premier Foods forecast its net debt would be ‘broadly in line’ with the board’s expectations and last year’s levels of £285m.
Russ Mold, director of investment at AJ Bell, noted that the company was “having an extremely good time trading.”
He added: “The company has shown that its recent success is not just due to people trapped indoors and feasting on sweet treats during the pandemic.
“Instead, the company reaps the benefits of resolving its debt problems and being able to reinvest additional cash into the company to make it more competitive and innovative.”
Founded as Hillsdown Holdings in 1975, Premier Foods’ portfolio also includes Loyd Grossman sauces, dried soup maker Batchelors, instant mash potato brand Smash and custard maker Ambrosia.