Premier Foods (GB:PFD) provided a trading update for the first quarter that ended July 2, 2022, on Wednesday – the group’s sales were up by 6% as compared to the previous year.
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Its total sales were £197 Million for the quarter.
It also reported market share gains in both formats: in-store as well as online.
The company is in line with the board’s expectations and the outlook remains unchanged for financial year 22/23.
Solid brand portfolio
The company’s grocery segment sales increased by 6.3%. Instant ramen brands, Batchelors and Nissin, were top performers, along with the value meal solutions. These brands own Cup Noodle and Super Noodles, which have become popular as consumers try to cut their food budgets.
The sales of the sweet treats segment were up by 5.1%, driven by Cadbury cakes and Mr Kipling. The TV advertising campaign for Mr Kipling helped the brand hit positive figures in the quarters.
Mr. Kipling also posted a record performance in Australia, pushing Premier’s international sales to increase by 12%.
Among the new product launches, the company launched a healthier range of cakes under its brand Mr Kipling which was well-received by customers.
The company also pointed out that it is going to increase its product prices to ease the effect of inflation on profitability.
Alex Whitehouse, the chief executive of the company, said: “We have made good progress in recovering our input cost inflation through a range of measures, including cost efficiencies and pricing, and we continue to monitor the situation closely.”
The company’s shares climbed 4.3% to 115.4p post the update. Overall, the stock is up by 6.2% in the last year.
Premier Foods has iconic brands under its umbrella, such as Mr Kipling, Ambrosia, Bird’s Custard, Oxo, Homepride, Sharwoods, and many more.
View from the city
According to TipRanks’ analyst rating consensus, Premier’s stock has a Moderate Buy rating from HSBC analyst Doriana Russo.
She has an average price target of 120.0p, which represents an 8.1% change in the price from the current level.
Conclusion
As more and more people cut down on spending in the UK, the company’s sales should remain stable, even in a recession.
With a diversified portfolio of famous brands, along with international exposure, Premier Foods have enough headroom to face the economic headwinds.
