Exceedingly good Christmas for Mr Kipling cakes spurs Premier Foods' outlook

UK's Premier Foods sees annual earnings above expectations
UK's Premier Foods sees annual earnings above expectations Copyright Thomson Reuters 2022
By Reuters
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By Muhammed Husain

-Premier Foods, the maker of Mr Kipling and Cadbury cakes, said on Thursday its annual profits would surpass market expectations after a stellar holiday season that saw households splurge on its cakes, sauces and other sweet treats in family gatherings.

Shares of the London-listed company rose 6.7% in early trade after it forecast trading profit of at least 145 million pounds ($197.58 million) for the fiscal year ending April, ahead of analysts’ average estimate of 140.7 million pounds.

The group’s optimism was reflected in robust sales across its top brands, with its trademark Mr Kipling delivering its best-ever Christmas sales.

Premier Foods had spent most of its earnings from the first half of the year to furnish its stock to avoid supply snags, as Britain’s food distribution channels were hit by labour shortages from prolonged lockdowns, rising prices and Brexit.

The group’s third-quarter sales fell 1.8% from a year earlier as restrictions were eased compared with 2020 when lockdowns had most people eat at home.

However, they were still 7% above pre-pandemic levels in 2019.

“The principal takeaway for us is that PFD have maintained good underlying sales momentum, in a year of tough comps and have protected margins, in a year of high cost inflation,” analysts at Jefferies said.

Sales of Mr Kipling and Cadbury cakes in Britain spurred the growth of Premier Foods’ popular sweet treats category, while its grocery brands including Bisto gravy, Sharwood’s sauces and Nissin noodles also saw strong demand.

The company, which traces its roots to the early 1800s, is also ramping up its expansion into international markets, as it expects the first shipments of Mr Kipling cakes to enter U.S. stores during the fourth quarter.

($1 = 0.7339 pounds)

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