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Premier Foods has pledged no further price rises in 2023 as the Bisto, Batchelors and Mr Kipling owner revealed a strong start to the year and declared the period of soaring costs had peaked.
The group said in a Q1 trading update this morning it now expected trading profits for the year to be at the top end of market forecasts - currently £162m to £165.4m - after sales growth in the 13 weeks to 1 July of 21.1%.
Branded sales also jumped 17.5% in the quarter and Premier made further grocery market share gains.
CEO Alex Whitehouse said: “We believe the recent period of significant input cost inflation is now past its peak and have no further price increases planned for the rest of 2023.”
He added the Q1 sales performance was “broad based”, supported by ongoing brand investment, new product development, such as Mr Kipling Brownie Bites, and strong instore activation.
“Our portfolio, which helps consumers make good value and nutritious, tasty meals at home, continues to demonstrate a high level of relevance in the current, challenging economic climate,” Whitehouse said.
The grocery division of the group registered “a very strong performance” in the period, as sales increased 26.7% year on year, with all the major brands “well ahead”.
Sweet treats sales grew 7.6% in the quarter, with branded sales flat and non-branded up 86.2% thanks to contract gains in pies and tarts and pricing benefits on existing product lines.
Sales overseas were also 14% higher, with continued expansion of Mr Kipling in the US and record market share for the brand in Australia.
Premier said revenue growth in the grocery business was expected to moderate in coming quarters, as year-on-year effects of higher prices reduce, while the trajectory for sweet treats was expected to build through the second half of the year.
Shares in the group rose 1.1% to 129p as markets opened, with the stock up 18% in 2023.
Morning update
English winemaker Chapel Down has increased market share in supermarkets as demand for its sparkling wine continued to grow.
The group reported “a highly successful” first half to 30 June in a trading update, with revenues up 21% to £8.4m.
Total wine volumes increased 6% to 732k, with traditional method sparkling volumes up 32% to 428k, which Chapel Down said reflected the “continued successful delivery of our premiumisation strategy”.
Volume growth was also amplified by a 16% jump in average sales price, driven partly by a stronger mix of more premium product and also by price hikes across categories.
Off-trade sales rose 25% in the half, with Chapel Down market share increasing by five percentage points year on year to 36% and the brand driving 80% of overall English sparkling wine category value growth (NIQ year to date to 3 July).
On-trade net sales grew by 20% through increased distribution in premium outlets.
CEO Andrew Carter said: “Our focus remains on delivering significant growth in sparkling wine sales, margins, profits and cash flow, so we are extremely pleased with the powerful momentum of the business in the first half of the year.
“We are continuing to deliver on our growth plans by building our leadership position in the fast-growing english sparkling wine category to deliver long-term shareholder value.”
He added: “Consumers’ love for Chapel Down continues to grow as more people at home and abroad learn about our brand and our wines, and this is fueling strong and profitable growth across all our distribution channels. We have a world-class team in place, are successfully executing our premiumisation strategy to support and grow our margins, and have a strong balance sheet to enable us to meet our target of doubling the size of our business by 2026.”
The FTSE 100 continued to rally this morning as markets weighed up what a less agressive rise in interest rates means for the economy, with the blue-chip index up 0.5% to 7,626.97pts.
Early risers, along with Premier Foods, included Glanbia, up 3.4% to €14, McBride, up 2.2% to 32.2p, and Ocado, up 2% to 697.2p.
Naked Wines was one of the few fallers, down 2% to 76.7p.
Yesterday in the City
The FTSE 100 jumped 1.8% to 7,588.20pts as markets digested a bigger-than-expected slowing of inflation in June.
Gainers included Fever-Tree, climbing 8.7% to 1,411p, Supermarket Income REIT, up 6.2% to 78.4p, and Just Eat Takeaway, up 5.6% to 1,395p.
Greencore fell 1.8% to 83p, while Science in Sport dropped 1.6% to 15p and Virgin Wines UK dipped 1.6% to 30.5p.
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