Premier Foods FY profit seen at top end of expectations
Mr Kipling owner Premier Foods said on Friday that full-year adjusted pre-tax profit was set to be at the top end of its expectations after "a very encouraging start to the year".
The company - which also owns the Bisto brand, among others - said group sales in the first quarter were up 6.3% versus two years ago, at the top end of its expected range of 5% to 6%, with branded sales 9.3% higher.
Compared to the previous year, sales were lower, as expected, as the company "lapped strong comparatives when UK households consumed the majority of their meals at home".
Premier said online sales were similar to the high levels seen last year and nearly double that of two years ago.
Chief executive officer Alex Whitehouse said: "Branded sweet treats grew year-on-year, with Mr Kipling up 7.5%, benefiting from our range of low sugar options and the ongoing success of the premium Signature range.
"I'm very pleased by the progress of our healthier options ranges, such as Sharwood's low fat cooking sauces, which have grown at over twice the rate of our branded portfolio, as consumers continue with their recently adopted good healthier eating habits.
"International also performed particularly well, building on the very strong gains from last year, growing by 17% on a two-year basis, as we continue to build sustainable, profitable overseas businesses."
At 1525 BST, the shares were up 5.3% at 110.60p.
Broker Peel Hunt, which rates the stock at 'buy', said: "Premier Foods continues to present excellent value given the positive trading momentum and improving financial position.
"We have increased our target price from 143p to 145p to reflect the upgrade. The shares are trading on a price-to-earnings of 10x to March 2022E and 8.5x EV/EBITDA, which is low for a FMCG business with leading brands."
Russ Mould, investment director at AJ Bell, said: "Strategically, Premier Foods has come a long way since its days as a zombie company where all the cash it made was gobbled up on debt repayments, leaving nothing to put back into the business. Now that situation has been resolved, it is reinvesting fast in product innovation and marketing, and you can see that it is working.
"Mr Kipling has long been a favourite with shoppers across the country, but pre-pandemic had faded slightly in terms of popularity. The brand has now bounced back with aplomb, helping act as a key sales driver for the group."