Premier Foods plc (LON:PFD) has announced its preliminary results for the 52 weeks ended 30 March 2024.
Full year ahead of expectations and return to volume growth in Q4
| Headline results (£m) | FY23/24 | FY22/23 | change |
| Headline Revenue | 1,122.6 | 975.6 | 15.1% |
| Trading profit1 | 179.5 | 157.5 | 14.0% |
| Adjusted profit before taxation4 | 157.9 | 137.2 | 15.1% |
| Adjusted earnings per share7 (pence) | 13.7 | 12.9 | 6.4% |
| Net debt11 | 235.6 | 274.3 | £38.7m lower |
| Statutory measures (£m) | FY23/24 | FY22/23 | change |
| Revenue | 1,137.5 | 1,006.4 | 13.0% |
| Profit before taxation | 151.4 | 112.4 | 34.7% |
| Profit after taxation | 112.5 | 91.6 | 22.8% |
| Basic earnings per share (pence) | 13.0 | 10.6 | 22.6% |
| Dividend per share (pence) | 1.728 | 1.44 | 20.0% |
Alternative performance measures above are defined below and reconciled to statutory measures throughout.
Headline Revenue presented for FY23/24 excludes ‘Knighton Foods’, Statutory Revenue includes Knighton Foods
| Financial headlines |
| · | Headline revenue up 15.1%; Branded revenue up 13.5%, including strong branded volume growth in Quarter 4 |
| · | Total Headline Grocery revenue up 16.7%, Sweet Treats revenue up 10.6% |
| · | Full Year market share13 increased +29bps; both Grocery and Sweet Treats grew share in H2 |
| · | Trading profit ahead of expectations and up 14.0% versus prior year |
| · | Adjusted profit before tax up 15.1% at £157.9m; adjusted earnings per share up 6.4% reflecting tax rate increase |
| · | Profit before tax up 34.7% to £151.4m |
| · | Profit after tax up 22.8%; basic earnings per share up 22.6% to 13.0 pence |
| · | Net debt/EBITDA reduced to 1.2x; lowest ever leverage |
| · | Pension deficit contributions suspended from 1 April 202417 |
| · | On track for FY24/25 expectations |
| Strategic headlines |
| · | UK branded revenue up 13.6% |
| · | Increased marketing investment across all major brands |
| · | Infrastructure investment increased to £32.8m year on year, in line with guidance |
| · | New categories revenue up 72% led by porridge pots and driving Ambrosia to a £100m brand |
| · | International revenue up 12%8; continuing to build distribution in target markets |
| · | The Spice Tailor now listed in 10 countries and returns well ahead of original plan |
| · | FUEL10K acquisition in H2, integration completed, gaining market share and initial returns ahead of plan |
Alex Whitehouse, Chief Executive Officer
“This has been another really strong year for the business with considerable progress across all our key financial metrics and five pillar growth strategy. In the UK, branded revenue increased by 13.6%, accompanied by 29 basis points of market share gain, as we continued to outperform the market. Our brands continue to demonstrate their relevance to consumers, helping them cook and prepare nutritious and affordable meals during what has been a challenging time for many people. All our leading brands benefitted from increased marketing investment, as we extended our ‘Best Restaurant in Town’ campaign into its second year. Ambrosia has now become our fourth £100m brand, in part driven by the premium Ambrosia Deluxe range and the extension into breakfast through porridge pots. Additionally, we continue to work very closely alongside our partner, Nissin, and yet again, Nissin was one of our fastest growing brands having grown by 54% on average over the last five years.”
“We continue to invest in our manufacturing sites, with capex stepping up as planned to £33m, as we invest in driving efficiencies and facilitating growth through product innovation. Our expansion into new categories is proving to be particularly successful with revenue growing by over 70%, led by Ambrosia porridge, and we extended distribution of Angel Delight ice-cream, Cape Herb & Spice and Oxo Marinades. International sales grew by 12%8 with The Spice Tailor delivering returns ahead of plan and distribution now available in 10 countries. We were also delighted to acquire FUEL10K which is now fully integrated into the core business, is performing very well and for which we have exciting future plans.”
“We continue to maintain our strong financial discipline; leverage reduced to 1.2x Net debt/EBITDA this year, our lowest ever level, and we are proposing another 20% increase in the dividend. We recently announced the suspension of pension deficit contributions, significantly increasing our free cash flow, which enhances our ability to invest in infrastructure and pursue M&A opportunities to deliver future growth. We have a strong set of plans for this year, across each of our strategic pillars and with our return to volume growth, we are on track to deliver on full year expectations.”
| Dividend |
Subject to shareholder approval, the directors have proposed a final dividend of 1.728 pence in respect of the 52 weeks ended 30 March 2024 (FY22/23: 1.44p), payable on 26 July 2024 to shareholders on the register at the close of business on 28 June 2024. This represents a 20% increase in the dividend paid per share compared to FY22/23, is ahead of adjusted earnings per share growth, reflecting the confidence we have in the future and is consistent with the Board’s progressive dividend approach. The ex-dividend date is 27 June 2024.
| Outlook |
The Group expects a return to volume driven revenue growth this year, as demonstrated in quarter four, partially offset by a lower price per unit. Further progress in FY24/25 is expected to be delivered across all the Group’s strategic pillars, through the application of the Group’s proven branded growth model, with expectations for the full year on track. Following the successful de-risking of pension obligations and the suspension of deficit contribution payments, the Group has a number of opportunities to invest in the business at attractive returns to increase efficiency and innovation, while continuing to explore M&A opportunities and apply its progressive approach to dividends.
| Enhanced capital allocation opportunities |
The Group is highly cash generative, benefits from strong EBITDA margins in line with global branded food sector peers, and has substantially reduced its interest costs in recent years.
In March 2024, the Group announced the suspension of pension deficit contribution payments, which historically has consumed a significant proportion of cash. This position frees up £33m free cash flow in FY24/25, presenting enhanced options to help the Group deliver on its growth ambitions. These are summarised as follows:
| 1. | Capital investment: To increase efficiency and automation at our manufacturing sites and facilitate growth through product innovation |
| 2. | M&A: Continue to pursue branded assets which would benefit from the application of the Group’s branded growth model. We will maintain our financial discipline on M&A, applying a similar approach as to the recent acquisitions of The Spice Tailor and FUEL10K, with a focus on Return on Invested Capital. |
| 3. | Dividends: Expect to pay a progressive dividend, growing ahead of earnings. |
The Group’s Net debt/EBITDA leverage target of 1.5x remains unchanged.
| Strategy overview |
The Group’s five pillar strategy drives growth and creates value, as outlined below.
| 1. | Continue to grow the UK core businessWe have a well established and growing UK business which provides the basis for further expansion. The Group’s branded growth model is at the heart of what we do and is core to our success. Leveraging our leading category positions, we launch new products to market driven by consumer trends, support our brands with sustained levels of marketing investment and foster strong customer and retailer partnerships.Proof point: UK branded revenue growth of 13.6%. |
| 2. | Supply chain investmentWe invest in operational infrastructure to increase efficiency and productivity across our manufacturing and logistics operations, providing a virtuous cycle for brand investment. Capital investment in our sites also facilitates growth through our innovation strategy and enhances the safety and working conditions of our colleagues. We are also now investing in low energy manufacturing solutions to reduce energy costs and drive scope 1 and 2 emission reductions, aligned to our Enriching Life Plan.Proof point: Capital investment increased to £32.8m. |
| 3. | Expand UK business into new categoriesWe leverage the strength of our brands, using our proven branded growth model to launch products in adjacent, new food categories.Proof point: Revenue growth of products in new categories increased by 72% compared to the prior year. |
| 4. | Build international businesses with critical massWe are building sustainable business units with critical mass overseas, applying our brand building capabilities to deliver growth in our target markets of Republic of Ireland, Australia & New Zealand, North America and EMEA. Our primary brands to drive this expansion are Mr Kipling, Sharwood’s and The Spice Tailor.Proof point: Revenue growth of 12%8 with The Spice Tailor now available in 10 countries. |
| 5. | Inorganic opportunitiesWe are looking to acquire brands where we believe we can drive significant value through the application of our branded growth model.Proof point: The Spice Tailor performed ahead of original returns expectations this year and we also acquired FUEL10K, the vibrant Breakfast brand. |
| Environmental, Social and Governance (ESG) |
The Group’s ‘Enriching Life Plan’, encompasses the three strategic pillars of Product, Planet and People, with encouraging progress delivered against each of these pillars18. In Product, revenue from products with a high nutritional standard19 such as Loyd Grossman Tomato & Basil cooking sauces and Bisto 25% reduced salt Beef Gravy increased by 19% in the year. Additionally, 44% of the Group’s products are now classified as having a regulated health or nutrition claim and are of a high nutritional standard19. Progress in Planet includes a 13.6% reduction in Scope 1 and 2 carbon emissions, with the first solar panels to be installed at a Group manufacturing site completed at Stoke. In People, the Group continued its partnership with FareShare, donating nearly 950,000 meals during the year, a 31% increase on last year; furthermore, embracing diversity is an important part of the Premier Foods culture and 46% of management colleagues are female.
A presentation to investors and analysts will be webcast today at 9:00am BST. To register for the webcast follow the link: www.premierfoods.co.uk/investors/investor-centre
A recording of the webcast will be available on the Company’s website later in the day.
A conference call for bond investors and analysts will take place today, 16 May 2024, at 2:00pm BST. Dial in details are outlined below:
| Telephone: | 0800 358 1035 (UK toll free) |
| +44 20 3936 2999 | (standard international access) |
| Access code: | 061561 |
A factsheet providing an overview of the Preliminary results is available at: www.premierfoods.co.uk/investors/results-centre
A Premier Foods image gallery is available using the following link: www.premierfoods.co.uk/media/image-gallery/
