Premier Foods plans marketing push

Filomena Scalise

Filomena Scalise

Published May 19, 2015

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London - The owner of Mr Kipling cakes, Premier Foods, said a rise in marketing spending on its top brands and improving volume growth in the grocery market would offset the pressures from a supermarket price war and help it meet profit forecasts.

The company said on Tuesday profit on a proforma basis, as it moves from a calendar fiscal year to an early April year-end, fell 6 percent, as expected, to 131 million pounds ($205 million) on sales down 4.5 percent, adding trade was improving.

Group sales in its final quarter fell 0.6 percent with branded sales flat, representing a fourth straight quarter of improvement as advertising and new products helped boost demand.

Under chief executive Gavin Darby, who joined in 2013, the firm has slimmed its operations and reinvested cost savings into increased marketing on a core group of brands such as Mr Kipling and Ambrosia deserts to drive sales.

Progress has been hit though by recession-hardened shoppers' penchant for more own-brand products and discounter stores - a trend that has rocked Britain's leading supermarkets, Premier Foods' biggest customers, and sparked a price war.

The group said on Tuesday, however, that discounter growth was slowing as traditional supermarkets fight back. Steadily rising volume growth in its categories and the wider UK grocery market, and shoppers' improving disposable incomes were also positives for the firm, it said.

“While we expect the trading environment in the coming quarters to be challenging, our expectations for the year are unchanged,” Darby said.

Reuters

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