Premier Foods PLC (PK) (PFODF)

Premier Foods, the UK-based food processing group, this morning announced its preliminary results for the year ended 2 April 2016, showing group sales up by 0.6% at £771.7m and trading profit unchanged at £131.0m.

The company's share price had endured a volatile year following the rebuffed takeover advances from US spice maker McCormick & Co earlier this year and Japanese-based multinational food company, Nissin Foods, taking a 19.9% stake in the company.

Premier Foods produces a range of well-known branded food products including Mr Kipling cakes, Bisto, Oxo, Cadbury cakes and Loyd Grossman.

In today's results, the British company flagged adjusted profit before tax increased by £2.9m to £86.1 million and adjusted earnings per share increased 4.6% to 8.3 pence.

Premier Foods spurned takeover advances from US spice maker McCormick & Co, preferring to form an alliance and deepen its relationship with Japan's Nissin Foods instead.

It believes the deal with Nissin Foods, announced on 23 March, will enable it to accelerate the growth of its products in key overseas markets, as well as giving it access to Nissin's intellectual property and look at potential joint manufacturing.

As Gavin Darby, Chief Executive Officer, stated in today's results "We are very pleased to report sales growth both in the year and the fourth quarter in what continues to be a deflationary market," and in particular he defended the company's strategy of spurning their US suitor "The potential opportunities presented by our partnership with Nissin are also very exciting".

Investors initially welcomed the earnings announcement this morning, with the stock trading as much as 4.5% higher to 41 pence. However, after the dust had settled the share price was sold off and closed down 3.2%, at 38 pence, for the day's trade.

This number is a far cry from the 60 pence price the stock was trading during the McCormack courtship earlier this year. However, investors will take heart from sales growth that was flagged across the company 'with six of our major brands growing on average 3.4% in the year', especially taking into account the broader weak environment that the company is trading in.

Looking ahead, the company raised its financial year 2016/17 sales growth guidance raised to 2-4%

Certainly, the future will have to be bright for the company's share price to reach its previous lofty levels seen earlier this year.

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Premier Foods, the target of a recent takeover approach by US spice-maker McCormick, said it had “a strong future” as an independent company, albeit through a deepening relationship with Japan’s Nissin Foods, as it reported a 3.5 per cent rise in underlying full-year pre-tax profits.

Gavin Darby, chief executive, pointed to sales growth of 3.4 per cent at six of Premier’s eight biggest brands, despite deflation and falling UK grocery prices, as evidence of the group’s momentum.

McCormick & Co. Inc. had to boost its acquisition offer by 25 percent to get a foot in the door with British takeover target Premier Foods plc.

But the possible deal's future is still uncertain after a public back-and-forth. And leadership at Sparks-based McCormick (NYSE: MKC) remains surprised Premier exposed their purchase offer in the first place

Premier Foods (PRRFY) had jumped 42% to 44.75 pence by mid-morning in London after the company said it had rejected two takeover proposals from McCormick (MKC - Get Report) , with the most recent pitched at 60 pence per share. It said it is instead pursuing a cooperation agreement with Japan's Nissin Foods Holdings. Under U.K. takeover rules, McCormick must now by April 20 either formalize its bid or publicly bow out.

We announce our Half Year 2015/16 Interim results

We announce our Interim results for the 26 weeks ended 3 October 2015 and our exciting partnership with Paul Hollywood.
Branded sales growth driven by innovation and investment

- Branded sales in H1 increased +0.1% and Q2 up +1.6%; first quarterly increase for two years
- Trading profit2 increased +8.4%
- Adjusted profit before tax up +21.6% and adjusted earnings per share increased +21.9%
- Operating profit £23.3m, up £36.1m on FY15 H1
- Profit after tax £21.7m, compared to prior period loss after tax (£49.1m)
- Net debt of £585.3m in line with expectations; will reduce significantly in H2
- Combined pension deficit reduced to £32.8m from £211.8m
- Announces introduction of new brand; Paul Hollywood premium baking mixes

Gavin Darby, CEO: “We are pleased to see Group branded sales growth in both the first half and second quarter of this financial year, as well as Trading profit progression. This reflects the clear benefits from our continued commitment to brand investment and innovation. It is also encouraging to see strong sales growth in our International business following the investment we’ve made in additional resources.”

“In the third quarter of the year, we expect to deliver positive Group branded sales growth, with Sweet Treats performing more strongly than Grocery. The industry backdrop remains a challenging one, but with strategies which are delivering tangible results and significantly higher marketing spend planned for the second half, our profit expectations for the year remain unchanged.”

“In our Sweet Treats business, we are on track to deliver double digit margins in FY15/16 a year earlier than previously expected. Looking further forward, we remain committed to investing for sales and profit growth, and expect to deliver branded sales growth for the Group of 1-2% in FY16/17 and the medium term.”

Continuing operations FY16 H1 FY15 H1
Revenue 341.2 343.9
Operating profit / (loss) (£m) 23.3 (12.8)
Profit / (loss) after taxation (£m) 21.7 (49.1)

Underlying Results FY16 H1 FY15 H1 Change (%)
Branded Sales (£m) 306.6 306.4 0.1%
Trading profit (£m)2 50.6 46.7 8.4%
Adjusted profit before tax (£m)4 28.1 23.1 21.6%
Adjusted earnings per share (pence)4 2.7 2.2 21.9

Premier Foods plc
Appointment of Jette Andersen
RNS Number : 1828S
Premier Foods plc
16 March 2016