Premier Foods: 2009 was an excellent year for Hovis

London / UK. (pf) Premier Foods PLC has released a trading statement for the full year to 31 December 2009. Britain´s biggest food manufacturer is pleased to report good progress in 2009, and expects to report encouraging branded sales growth of 6,4 percent and market share gains in its key branded categories.

The company expects to announce total sales for 2009 of 2’661 million GBP, up 2,2 percent on 2008, with branded sales for the year of 1’678 million GBP representing 63 percent of total Group sales compared to 61 percent in 2008. Sales in Q4/2009 were up by 1,5 percent on Q4/2008 with branded sales up 7,0 percent. The company expects to report Trading profit of around 320 million GBP, an increase of approximately 3,5 percent on 2008 and net regular interest of around 155 million GBP. Adjusted Profit before tax is expected to be around 165 million GBP.

The Hovis division has had a very successful year in line with the strategy launched in 2008 to grow the Hovis brand. Strong branded sales growth in Bakery has been positive to profit. Milling profit has also increased as positive mix has more than offset lower volumes. Premier Foods expects to report strong year on year growth in Trading profit.

Branded bakery sales for the year of 370 million GBP were up 13,3 percent. Hovis´ market share increased by 3,0 percentage points over the year to 25,9 percent. Sales were driven by improved product quality, better distribution, improved marketing and promotional activity. Year on year branded sales growth in Q4/2009 was 7,5 percent with Q4/2008 the first full quarter to benefit from the Hovis relaunch.

Retailer branded bread for Hovis declined by 25,2 percent in Q4/2009 and by 15,7 percent for the year as a whole. This was principally driven by a decline in the market for retailer brand bread of around 19 percent year on year in Q4/2009 and by 18 percent for the full year as customers have switched into branded bread. The company also exited some contracts in Q3/2009 to allow for the continued branded growth and the lower own label volumes were more than compensated for by the growth in branded bakery volumes.

In Milling, third party flour volumes for the year declined by 2,4 percent; primarily as a result of the exit from a low margin flour contract in H2/2008. Sales in Q4/2009 were down 9,6 percent on Q4/2008 and in the year were 193 million GBP, down 16,7 percent primarily due to deflation in flour selling prices reflecting lower input costs. Trading profit for the Milling business increased as positive mix offset the lower volumes.

Info: Full Year Trading Statement 2009 (PDF, four pages, 22 KB).