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Sunday 18 August 2019

Sweet start to new year for Mr Kipling cake-maker

Parent company Premier Foods has seen sales rise after a terrible year.

Premier Foods has reported a rise in sales as it attempts to put a terrible year behind it (Premier Foods/PA)
Premier Foods has reported a rise in sales as it attempts to put a terrible year behind it (Premier Foods/PA)

By Simon Neville, PA City Editor

Mr Kipling cake-maker Premier Foods has revealed an increase in sales, partly thanks to the cooler spring and summer weather leading to a boost for Bisto gravy, Paxo stuffing and Ambrosia.

The business, which is searching for a new chief executive and new chairman as it attempts to put a terrible year behind it, said sales in the 13 weeks to June 29 were up 1.1% compared with the same period a year ago, with branded sales up 2.9% and total UK sales rising 2.6%.

Alastair Murray, acting chief executive of Premier Foods, said: “Both Mr Kipling and Batchelors have already benefited from TV advertising campaigns in the first quarter.”

The company added: “The flavourings and seasonings category was strong, growing over 10% compared to the prior year due to a softer comparative period in 2018 when the UK experienced exceptionally warm weather.

“Accordingly, Bisto and Paxo both delivered strong revenue growth and market share gains in the quarter. Ambrosia also benefited from relatively cooler weather in June, gaining share in a growing category.”

But there was bad news in the international business, with sales falling 18%.

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Ex-Premier Foods boss Gavin Darby was criticised for taking a near-£1m golden goodbye (Premier Foods/PA)

Premier warned that Brexit is hitting business, following heavy stockpiling prior to the original deadline in March.

Bosses said: “This was due to the unwind of Brexit-related stock in Irish customers’ supply chains. The international business is, however, expected to return to sales growth in subsequent quarters.”

Premier’s Knighton Foods division suffered from delistings by customers, but the company insists this was offset by non-branded groceries, which saw sales up 2.2%.

Nevertheless, sales of non-branded sweet treats plunged 37.2%.

The last year has been tough for Premier, following pressure from activist investors to overhaul the business.

Former chief executive Gavin Darby stepped down in January, after narrowly avoiding a defeat for re-election at the company’s annual shareholder meeting a year ago.

But the board has been criticised for giving him an £863,000 pay-off, with shareholder advisory groups recommending investors vote down the plan in a year that saw the company reveal pre-tax losses of £42.7 million.

In February, the company said it would review its portfolio of products, and could look to sell some of its famous brands.

Premier Foods is exploring a potential sale of Mr Kipling as it presses ahead with a review under pressure from activist shareholders.

Selling Mr Kipling, part of a larder of brands that also includes Angel Delight and Bisto gravy, is one of several options under consideration by the consumer goods group, which embarked on a self-evaluation exercise in February.

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