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Premier Foods Sees Growth Spurt

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Premier Foods has seen a growth spurt in their sales and profit in the half-year financial results.

Their growth report comes alongside partnerships with Nissin and Mondelez International, which have proven to be profitable.

Growth in sales

Sales for the company grew by 1.5% to £353.3 million in the 26 weeks of the year leading up to September 30 2017. Their second quarter sales in particular saw a big rise, going up by 6.2% from the previous quarter.

Clock and money

CEO Gavin Darby said, “We completed the signing of the new Mondelēz International Global Strategic Partnership in the first half of the year and, through our partnership with Nissin, Batchelors is now the fastest growing major brand in our portfolio following the launch this year of convenient pot format products such as Super Noodle Pots.”

More than 40% of the growth can be attributed to their new partnerships. Nissin is an instant noodle manufacturer, while Mondelez International is a global food jobs giant with connections to various niches.

Their grocery unit saw half-year sales up by 1.9% on the previous year, to a total of £225 million. Branded sales also rose though by a lower margin of 0.9% to £214.7 million. Meanwhile, non-branded sales saw the biggest surge, up to £40.3 million. This represented an increase of 7.4% year on year.

The Sweet Treats division saw 0.7% growth to £98.3 million. While some of their departments did see a loss, it was not enough to cancel out the gains that were made elsewhere in their ranges. This adds up to a slight increase of 0.5% to their adjusted profit before tax, to £26.3 million. Operating profit shot up by 2.3% to £22.5 million.  

Good results for the firm

“Our International business continues to go from strength to strength and saw revenue growth of 23% in the first half of the year,” added Darby. “Overall, we continue to expect the business to make progress in the second half of the year and our expectations for the full year remain unchanged.”

Not everyone is happy to be as optimistic, however. Fiona Cincotta is the senior market analyst at City Index. She said, “It's way too early to suggest that Premier Foods has a new lease on life – the bar was low coming into this result. But a return to first-half sales growth indicates investments in product innovation and marketing are reinvigorating the appeal of its brands.”

This could see a growth for new food recruitment opportunities too, since the company may look to capitalise on recent success by expanding or growing current facilities.

These results are great for Premier as they go against the general trend of the UK food and drinks industry this year. Consultancy Begbies Traynor pointed out that 8,399 businesses in this sector have been showing signs of distress within the third quarter of 2017. That’s compared to 7,072 in the same period of 2016.

Part of their success can be attributed to their deals, such as that made with Mondelez International in September. They signed a new five-year contract with the international company to continue making and marketing Cadbury-branded products, such as cakes and desserts. This was a huge coup for the company, as it also added new lines to their existing range. It is certainly something that has helped buoy their success over recent months.

The news is great for Premier Foods, and suggests that their recent business decisions have gone in the right direction. This is positive for the industry in general as it suggests that progress can be made in the current climate.