Premier Foods – Q1 Trading Update At Next Thursday’s AGM – Foods And Shares For All Occasions

On Thursday of next week, 18th July, Premier Foods (LON:PFD) will be holding its AGM at its St Albans premises in the Centrium Business Park. 

Ahead of the 11am meeting the group will be issuing its Q1 Trading Update, which should be positive in its outlook for the balance of the current year to end March 2025. 

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The Business 

Premier Foods declares itself as proud to be British, while employing over 4,000 people operating from 13 manufacturing and office sites across the UK.  

It makes the majority of the food it produces in the UK.  

Wherever it can, it sources sustainably from British suppliers and farmers, such as orchards and dairy farms, to help it create its well-loved products.  

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The group has worked with 40% of its suppliers for 10 years or more. 

It supplies a very wide range of customers including retailers, wholesalers, convenience stores and foodservice customers with its iconic products which feature in millions of homes.  

It operates primarily in the ambient food sector, which is one of the largest sectors within the total UK grocery market.  

The group has significant market share in its key grocery categories of: Flavourings & Seasonings (44%); Quick Meals, Snacks & Soups (38%); Ambient Desserts (41%) and Cooking Sauces & Accompaniments (15%).  

Within Sweet Treats it operates in the Ambient Cakes category (18%). 

Additionally, it also has a non-branded food business which manufactures products such as cakes and desserts on behalf of many UK food retailers. 

Its brands include: Batchelors, Loyd Grossman, Homepride, Paxo, Bisto, Oxo, Mr Kipling, Sharwoods, Nissin, Saxa, Angel Delight, FUEL10K, Plantastic, Atora, Marvel, McDougalls, Ambrosia, Birds, Be-Ro, Brown & Polson, Cadbury Cakes, Spice Tailor, and Smash. 

The group claims that 90% of UK households buy one or more of its products each year. 

The company has a growing international business, with many of its brands enjoyed by consumers worldwide. 

Results To End March 2024 

Sales were up 15.1% to £1,122.6m, while its adjusted pre-tax profits were also 15.1% better at £157.9m, but with earnings 6.4% better at 13.7p, while the dividend was 20% better at 1.73p a share. 

CEO Alex Whitehouse stated that: 

“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. 

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.” 

The Equity 

There are 868.79m shares in issue. 

The larger holders include Nissin Foods (24.27%), Van Lanschot Kempen Investment Management (5.52%), Brandes Investment Partners (4.86%), M&G Investment Management (4.02%), JP Morgan Asset Management (3.64%), Dimensional Fund Advisors (3.58%), Southeastern Asset Management (3.55%), The Vanguard Group (3.23%), Paulson & Co (2.94%), and Fidelity Management & Research (2.77%). 

Analyst Views 

Six analysts who follow the group rate the shares as a Strong Buy, with 198p a share as the average price objective. 

Sector specialists Clive Black and Darren Shirley at Shore Capital Markets have estimates out for the current year to end March 2025 for revenues of £1,169.0m, adjusted pre-tax profits of £161.3m, worth 13.7pper share in earnings and paying a 2.1p per share dividend. 

For the next year they see £1,204.0m sales, £169.6m profits, 14.4p earnings and a 2.5p per share dividend. 

My View 

I really like this group – just look at your own kitchen shelves and you will surely see some of its products. 

Such market penetration in its various sectors deserves a premium rating, but as yet it has not been recognised. 

The shares, now 166p, have been up to 180.20p this year, the highest level for at least five years.  

They are underrated and could so easily break up over the 200p level. 

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