London / UK. (pf) British Premier Foods PLC said in an Interim Management Statement that its Hovis brand´s dominant 26 percent share of the UK bread market is under attack from competitors. According to the company rival bread makers, including brands like Kingsmill and Warburtons, had stepped up promotional activity. The company said trading conditions were difficult, because of these «elevated» levels of competition. In other words: Premier Foods feels winter chill as first quarter total group sales fall 5,1 percent. The summary of Q1/2010:
- Market share growth in challenging markets
- Sales performance for the three months ended 31 March 2010:
- Drive brands sales up 3,4 percent
- Total branded sales value down 0,3 percent
- Total branded volumes up 2,2 percent
- Non-branded sales down 12,9 percent
- Total Group sales down 5,1 percent
- Net debt expected to fall by 100 million GBP year on year in H1
- Full year outlook remains unchanged
CEO Robert Schofield: «We are pleased that our brands have continued to gain volume market share with volumes of our Drive brands up 6,6 percent. Trading conditions, however, remain challenging with promotional activity across the market continuing at elevated levels. Non-branded sales were lower primarily due to promotional activity by brands, the effect of contract exits in 2009 and flour deflation. We expect an improving trend for non-branded sales through the year as contract exits and flour deflation drop out of the comparatives and recent contract wins come into effect. We are progressing well on our strategic cost reduction targets of delivering procurement savings and improving manufacturing efficiency. Our cash generation is in line with our targets and net debt should fall by 100 million GBP year on year in H1. We reiterate our guidance of earlier this year that, assuming no adverse change in the consumer and trading environment, we expect the benefits of our strategy to result in further progress in 2010».
The Hovis brand continues its progress with year on year sales value growth of 4,7 percent and volume growth of 8,5 percent supported by conversion of the entire Hovis range to 100 percent British Wheat. Hovis value market share in the quarter at 25,6 percent was 0,5 percentage points higher than the same period last year. Total branded sales increased by 1,6 percent in the quarter with Hovis brand gains partly offset by declines in smaller Defend brands. As anticipated, the company has recently seen an increase in competitor promotional activity which the company expects will result in lower market share in Q2. However, the company believes its marketing and promotional initiatives will return Hovis to share growth in H2.
Premier Foods has recently launched a new «Hearty Oats» loaf which is its first loaf to contain 50 percent oats and is approved by HEART UK, The Cholesterol Charity.
Non-branded sales declined 20,7 percent in the quarter, reflecting continued decline in the retailer brand bread category, bulk flour deflation in H2/2009 and the impact of exiting low margin contracts in 2009. The company expects this decline to slow in the second half of the year as it laps the contract exits in 2009 and the reduction in wheat prices. In total, bread volumes are down 5,9 percent.
The company expects to incur restructuring costs in Hovis in H1/2010 of four million GBP, primarily in relation to the closure of our Martland Mill distribution depot and a rolls line at the Wigan bakery.
Info: The complete Interim Management Statement is available here.
OTHER TOPICS FROM THIS SECTION FOR YOU:
- Greggs: announces new National Distribution Centre
- Greencore: announces H1-2024 trading update
- Orkla ASA: reports strong profit improvement in Q2-2024
- Cloetta AB: announces Q2-2024 interim report
- Axfood AB: Reports Q2-2024 Financial Results
- Chef Robotics: Launches AI-Powered Food Robot
- Conagra Brands: Reports Fourth Quarter 2024 Results
- Limerston Capital sells Village Bakery to Groupe Menissez
- GrubMarket: Buys Major Foodservice Company in Texas
- Lantmännen acquires Entrack AB
- DPC Dash: Concludes H1-2024 with Sustained Expansion
- Norway: Orkla Food Ingredients acquires FDE
- Fondo Italiano d’Investimento co-invests in Casa della Piada
- Greggs: invests in a new frozen manufacturing and logistics site
- Bundeskartellamt imposes fine against «Fritz!» manufacturer AVM
- Yum China: Celebrates Opening of its 200th KCoffee Store
- Beijing intends to roll out 5’400 food production robots
- K-Citymarket: sees significant sales growth in Finland
- DPC Dash: reaches 900-store milestone in China
- Coffee Holding: Terminates Merger with Delta Corp Holdings