Consumer belt-tightening bolsters Premier Foods’ highest growth in five years

The British food manufacturer reported revenue rose 3.6% to £819.2m ($1.1bn) in the 52 weeks to March 31 from £790.4m ($1.0bn), its fastest rate of growth in half a decade.

Pre-tax profit rose 74.1% to £20.9m ($28.1m), while operating profit lifted 12.7% to £69.3m ($93.3m).

According to Premier’s CEO Gavin Darby, UK shoppers are spending more on food as they cut back on non-essential items.

Eating at home on the rise

“As people tighten their belts, they eat out less and eat more at home, which is good for Premier,”​ he said.

Batchelors is now Premier's top performing brand, with revenue up 11% in the year, a turnaround from the decline it faced three years ago.

Darby dismissed reports of talks to sell Batchelors – adding the company was not looking for any other partnerships this year.

However, he noted the company’s growth was also fuelled by higher international sales and partnerships with noodle-maker Nissin Foods and candy maker Mondelez International.

“International has been the star performer with sales growing 25%, and are almost double the level of three years ago, while the benefits from our Nissin and Mondelez International partnerships together contributed 55% of our revenue growth,”​ he said.

No 1 in cakes down under

Revenue from Australia – Premier’s largest market abroad – grew 81% and Darby said the market is likely to experience further growth.

Premier currently commands the number one and two spots in the cake market down under.

Sales in Premier's grocery business rose 4.6% to £589.2m ($793.8m), while its sweet treats arm – which include Cadbury’s cakes made under licence – climbed 1.2% to £230m ($309m).

Darby said Premier had outstripped expectations and brought forward its next net debt target by nearly a year.

The company managed to shave off more than 5% of its debt, bringing it down to £496.4m ($668.7m).