LONDON (dpa-AFX) - Premier Foods plc (PFD.L) reported that sales in the first quarter were 3.1% lower than the prior year with a good performance in Sweet Treats held back by lower sales in branded grocery. This was in line with the Group's expectations. Group Branded sales were 5.4% lower, while Non-branded sales increased 11.3%.
Gavin Darby, Chief Executive Officer, 'Our first quarter sales were lower than last year, as we expected, primarily due to lower sales volumes in the grocery categories, notably desserts. At the retail level we have continued to outperform our markets and industry peers, our international business grew 20% in the quarter, and our cost savings programmes are on track. We expect to report positive sales growth in the second quarter, broadly flat sales in the first half and our expectations to deliver progress in the full year are unchanged.'
The Grocery business saw encouraging market share gains in major retailers and some pricing benefit in the quarter. However, the reported sales quarter on quarter were adversely impacted by lower market volumes partly reflecting a warmer June, lower promotional effectiveness particularly in the Desserts category and a move to more normalised levels of trade investment in non-retail channels. Across the quarter, trading in April and May was encouraging while June was slower in categories such as Flavourings & Seasonings, Desserts and Cooking Sauces & Accompaniments.
Non-branded sales in the Grocery business increased 8.9% benefitting in particular from increased sales at Knighton Foods. Sweet Treats Non-branded sales grew by 17.8% reflecting new contract wins across both multiple and discount retail customers.
The Group noted that its cost reduction and efficiency programmes are progressing well, and as planned. The SG&A re-sizing programme is now complete and cost reductions, which are expected to deliver savings of £10million this financial year, are flowing through.
The consolidation of the Group's warehousing and distribution operations into one central location in Tamworth, Warwickshire, is progressing in line with expectations. The Tamworth site is now operational and on track to manage one third of the Group's volumes by the end of July 2017. The transition from legacy facilities to Tamworth is expected to complete by the middle of 2018.
This financial year has started in line with the Board's expectations. The Group remains confident of delivering growth in quarter two, through continued market share gains and pricing benefits and therefore expects sales to be broadly flat in the first half of the year, assuming normal UK temperature trends. The Group continues to work towards its strategic objectives and expectations for FY17/18 sales and Net debt remain unchanged with progress weighted to the second half of the year.
The Group anticipates stronger trends in the second quarter and is beginning to see the reversal of the reduction in multi-buy promotions which impacted its Grocery volumes in the second half of last year.
The Group remains confident of delivering positive sales growth in quarter two and broadly flat sales for the first half, assuming normal UK temperature trends.
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