Premier Foods, behind branded goods such as Ambrosia custard and Mr Kipling, has warned of price rises ahead after reporting full year results that will see shareholders rewarded with a 20% hike in their dividend.
The company, which also includes Batchelor’s super noodles, OXO, Sharwood’s and Homepride sauces in its stable, is expected to accelerate the pace of prices increases in the months ahead as the group grapples soaring costs for staples such as wheat, dairy, energy and fuel.
The company made the announcement at the same time as official figures confirmed that UK consumer price inflation had hit a 40-year high of 9% – with food inflation rising 6.7% over the 12 months to April – as the cost of living crisis gathered speed.
Premier Foods said that it would try, where possible, to continue to mitigate rising costs through efficiency programmes.
They had contributed, Premier said, to a rise in its trading profit margin during its last financial year – hitting 16.5% -despite the pressures placed on margins by rising costs.
Headline trading profit of £148.3m was flat on the previous year but above its upgraded forecast of £145m – aided by a record performance by its Mr Kipling brand.
Image: Premier Foods makes branded and value items
Full year pre-tax profits fell by 16% as a boost from the sale of Hovis in the previous year fell away.
Shares rose by 6% as the company raised its dividend by 20% to 1.2p per share and maintained its outlook for sales despite growing warnings that price rises across the food sector were turning shoppers away from branded goods in favour of value ranges.
A report from consultants McKinsey was the latest to point out that behaviour was changing in response to the cost of living crisis, with supermarkets also starting to lose custom to discount rivals.
But chief executive Alex Whitehouse told investors he was “confident of delivering another year of good progress” after taking market share across its ranges.
He said in the results statement:” Yet again, our brands have grown faster than their categories, with revenues increasing nearly 10% vs two years ago as they gained volume and value market share in Grocery and Sweet Treats both instore and online.
“Mr Kipling enjoyed its best year ever, benefitting from sustained levels of marketing investment and a series of new product launches.”
