Premier Foods: Sales fall as trading conditions get tougher

London / UK. (pf) British Premier Foods PLC revealed that its revenues dropped in the third quarter as higher sales of its branded products were offset by declining volumes among its non-branded products. The heavily-indebted group, which makes some of the United Kingdom´s leading grocery brands, added that the trading environment had become increasingly tough. Key Facts:

• Branded sales volumes up 4,6 percent, value down 0,5 percent.
• Increasingly challenging environment with grocery market volumes down 3,2 percent, value down 2,3 percent.
• Continued branded volume market share growth, up 0,7 ppts to 23,0 percent, value share down 0,3 ppts to 24,0 percent.
• Drive brand sales volumes up 7,9 percent, value up 3,9 percent.
• Total Group sales down 4,2 percent owing to reduction in non-branded sales.
• Extended licensing agreement signed with Kraft for Cadbury Cakes.
• Repricing completed recovering sharp rise in wheat raw material costs.
• Successfully restructured swap portfolio substantially reducing risk.
• Efficiency programmes continue to make progress.
• On track to deliver 100 million GBP of recurring cash flow for the full year.
• Group continues to aim to make progress in 2010 but the slowdown in the third quarter means this is likely to be more modest and is, as always, dependent on Christmas trading.

CEO Robert Schofield: «We are making good progress on our stated strategic objectives, despite an increasingly challenging trading environment. Our brands continued to grow by 4,6 percent in volume over the period. This is against a background of our categories declining by an average of 3,2 percent for the quarter and represents robust market share gain. Although Group sales have fallen as a result of ceding own label contracts in bread, and the general decline of the own label markets.

Following constructive discussions with leading retailers, we have completed our repricing, in both Grocery and Hovis to recover the sharp rise in wheat prices. Our Grocery, Hovis and Meat-free businesses are trading well, taking market share and we expect each to match or increase Trading profit for the year. Profit in our non-branded chilled business, however, will be lower given competitive pressures and higher input costs.

We continue to reduce net debt and remain on track to generate at least 100 million GBP of recurring cashflow for the year as a whole. In line with our declared financial strategy, we have secured an important restructuring deal which reduces financial risk in our swap portfolio and which opens the way to diversifying sources of funding.

We still aim to make progress in the full year but the slowdown in Q3 means this is likely to be more modest and is, as always, dependent on Christmas trading».