Premier Foods has reported a 49.6% drop in half-year pre-tax profit to £13.9m on sales up 145.3% at £899.1m and has warned escalating wheat prices could force further price rises.
The food manufacturer, which acquired RHM in December last year and makes brands including Branston Pickle, Oxo stock cubes and Crosse & Blackwell cooking sauces, also said trading profit had increased 112.3% to £96.8m during the period.
In its Grocery division, which includes, convenience foods, pickles, sauces & meat free, spreads, desserts and beverages, sales rose 26.2% to £462.7m.
However, pro forma sales fell £4.4m to £398.4m in its Bread Bakeries division, with trading profit down £18.9m to £19m. The division had been hit by significantly higher wheat prices, increased distribution costs and overheads and reduced contribution from lower bread volumes, Premier said.
“Wheat prices have seen an unprecedented level of increase over the last few weeks and we are pleased to have been able to implement price rises across our bread and flour products from the start of September,” said CEO Robert Schofield. “However, if current wheat prices persist additional bread and flour price increases will be required. Other raw material cost inflation is also significant, making price increases across many of our products necessary.”
Pro forma sales also fell £3.8m to £119.5m in its culinary brands business because of reduced promotional activity, but rose £9m to £121.6m in its cakes division.
The integration of RHM remained on track and Premier said it was confident it would deliver £113m in cost synergies.
On the sale of its frozen division, Premier added that it had concluded the sale of certain assets of the ready meals division and hoped to reach a rapid conclusion on the disposal of the remaining parts of the business.
“While mindful of the turbulence that we have seen in the bread market over the last few months, we anticipate that we will be able to meet our sales and trading profit growth targets for the year,” added Schofield.
The food manufacturer, which acquired RHM in December last year and makes brands including Branston Pickle, Oxo stock cubes and Crosse & Blackwell cooking sauces, also said trading profit had increased 112.3% to £96.8m during the period.
In its Grocery division, which includes, convenience foods, pickles, sauces & meat free, spreads, desserts and beverages, sales rose 26.2% to £462.7m.
However, pro forma sales fell £4.4m to £398.4m in its Bread Bakeries division, with trading profit down £18.9m to £19m. The division had been hit by significantly higher wheat prices, increased distribution costs and overheads and reduced contribution from lower bread volumes, Premier said.
“Wheat prices have seen an unprecedented level of increase over the last few weeks and we are pleased to have been able to implement price rises across our bread and flour products from the start of September,” said CEO Robert Schofield. “However, if current wheat prices persist additional bread and flour price increases will be required. Other raw material cost inflation is also significant, making price increases across many of our products necessary.”
Pro forma sales also fell £3.8m to £119.5m in its culinary brands business because of reduced promotional activity, but rose £9m to £121.6m in its cakes division.
The integration of RHM remained on track and Premier said it was confident it would deliver £113m in cost synergies.
On the sale of its frozen division, Premier added that it had concluded the sale of certain assets of the ready meals division and hoped to reach a rapid conclusion on the disposal of the remaining parts of the business.
“While mindful of the turbulence that we have seen in the bread market over the last few months, we anticipate that we will be able to meet our sales and trading profit growth targets for the year,” added Schofield.
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