Premier Foods: sales and profits down in H1/2010

London / UK. (pf) British Premier Foods PLC announced the results for the six months to the end of June that were dented by restructuring and pension costs. But the company also said in its announcement that it was on track to generate its targeted cash flow for 2010. Summary:

• Brands are trading well in tough conditions with sales up 0,5 percent in value and up 3,5 percent in volume on a pro forma basis for the six months to 30 June 2010
• Volume market share gains in Drive categories
• Total sales down 4,5 percent on a pro forma basis for the six months to 30 June 2010 owing to own label sales which are down 12,7 percent. This reflects:
  • non-branded market volumes down 5,9 percent;
  • wheat deflation of 2,3 percent; and
  • 4,5 percent mainly owing to contracts, primarily in bakery, which were terminated in 2009.
• Gross profit margin up 60bp reflecting product mix, procurement gains and manufacturing efficiencies
• Operating expenses down 1,6 percent despite higher pension, marketing and restructuring costs
• Trading profit down seven million GBP to 110 million GBP reflecting, as previously indicated, eleven million GBP of additional pension, marketing and restructuring costs
• Operating profit up 40 million GBP to 67 million GBP following the completion of exceptional integration expenditure in 2009
• Loss after tax up 17 million GBP to 40 million GBP reflecting higher mark to market losses on swap contracts
• Net debt at 26 June 2010 1’365 million GBP, down 110 million GBP year on year

Commenting on the results, Chief Executive Officer Robert Schofield said: «These results reflect the actions we are taking in line with our trading strategy. Our principal brands are growing in both volume and market share and our gross margins have risen as we have improved product mix and delivered procurement gains and manufacturing efficiencies. We are controlling costs tightly and have made good progress in strengthening our cash flow and reducing debt. Today we are setting out further details of our programme to diversify and strengthen our financial structure. With the foundations of the strategy in place and delivery on track, we are looking forward to the rest of the year with enthusiasm».

Info: The complete announcement (press release, slides …) is available here.