Wednesday 18 September 2019

Pensions and restructuring drags Mr Kipling maker Premier into the red

The food manufacturer slipped to a pre-tax loss for the year to March 2019 from a £20.9 million profit the previous year.

Undated handout file photo issued by Premier Foods of products made by the company in a supermarket basket. The Mr Kipling cakes firm Premier Foods has served a pre-tax loss after being hit by one-off costs.
Undated handout file photo issued by Premier Foods of products made by the company in a supermarket basket. The Mr Kipling cakes firm Premier Foods has served a pre-tax loss after being hit by one-off costs.

By Henry Saker-Clark, Press Association City Reporter

Mr Kipling maker Premier Foods slid to a £42.7 million annual loss as it was hammered by pension charges and restructuring costs.

The food manufacturer slipped to a pre-tax loss for the year to March 2019 from a £20.9 million profit the previous year.

The food group, which also produces Ambrosia custard and Bisto gravy, saw profitability particularly impacted by an anti-discrimination ruling on women’s pensions by the High Court last year.

Profits were also dented by a £30.6 million impairment charge related to its Sharwood’s and Saxa brands.

Full-year revenues rose 0.6% to £824.3 million, as it was buoyed by 12% sales growth for Mr Kipling.

It also hailed “strong performances” by Ambrosia, Batchelors, Sharwood’s and its Soba noodles joint venture with Japanese food giant Nissin, the largest shareholder in Premier.

Sales were buoyed by accelerating growth in the fourth quarter, when it saw 3.1% growth compared the same period last year, as it benefited from customers building stock ahead of the original Brexit deadline.

Premier’s international business saw revenues dive 12.5% over the year, as it was impacted lower export volumes and overstocking of Cadbury cakes.

Premier Foods has delivered consistent progress over the last two years, growing revenue, trading profit, adjusted earnings and reducing net debt Alastair Murray, Premier Foods' acting chief executive

It also said today that it will launch a new brand called Plantastic as it becomes the latest food group to target plant-based and vegan trends.

Premier has been weighing brand disposal to reduce its net debt, which had fallen 5% to £469.9 million at the end of the year.

The results come three months after Premier launched a strategic review, bowing to pressure from investors Oasis and Paulson, who own more than 20% of the group and had called for a radical shake-up.

The Press Association revealed last month that the group has since hired bankers at boutique advisory firm d’Angelin & Co to explore a break-up.

The activists scored a victory in November when chief executive Gavin Darby said he would stand down following criticism from Oasis.

Alastair Murray, acting chief executive officer, said: “Premier Foods has delivered consistent progress over the last two years, growing revenue, trading profit, adjusted earnings and reducing net debt.

“While the first half of the 2019-20 year is expected to be slower than last year, reflecting the timing of marketing investment, we expect to make further progress over the next twelve months thanks to our continuing pipeline of new product innovation and strong customer relationships.”

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