Premier Foods has announced CEO Gavin Darby will leave in January after six years in the role. His departure follows a drawn-out battle with activist hedge fund Oasis Management Co., which had urged the board to oust Darby, stating he had driven the company into a ‘zombie-like state’.
At the company’s annual general meeting in July, Darby narrowly survived the chop after 41% of investors voted against his re-election.
There had been criticism over his rejection of a takeover approach from US firm McCormick in 2016 and more recently, his decision not to sell Premier’s Batchelors brand.
During the report of its half-year results yesterday, the company also revealed it is in discussions with potential buyers of its Ambrosia brand, and has a hard Brexit contingency plan to store products to guard against the risk of delays at ports.
It said it had ‘reflected upon the expressed views of some shareholders at the AGM’ and was now ‘actively looking at strategic options which may accelerate the creation of shareholder value.’
Premier acquired Devon-based Ambrosia from Unilever in 2003. The brand – famous for its Devon Custard and Rice Pudding – is the group’s third biggest; however, sales recently took a dip.
Premier said the sale will deliver ‘a meaningful reduction’ in its £500m+ ($648m) net debt, however, its half-year results showed pre-tax losses widen to £2.2m ($2.8m) in the six months to September 29, up from £1.2m ($1.5m) a year ago.
Conversely, it reported a 1.3% rise in revenue to £358m ($464m) and a 14.3% increase in adjusted pre-tax profit to £30.2m ($39.1m).
Strong growth from Mr Kipling
“Mr Kipling, the Group’s largest brand was key to this growth following an excellent consumer response to its brand relaunch in the UK with revenues up 13%,” said Darby.
- Half year revenue up 1.3% to £358m ($464m)
- Trading profit growth up 6.2% to £51m ($66m)
- Adjusted profit before tax up 14.3% to £30.2m ($39.1m)
- Net debt £509.5m ($660m); a £25.8m ($33.4m) reduction on H1 FY17/18
“The board has determined that it should focus resources on areas of the business which have the best potential for growth through accelerated investment in consumer marketing and high return capital projects.
“We have a strong innovation plan in place for the second half of the year, and profit expectations for the full year remain unchanged,” he added.
Brexit contingency plan
In the run-up to Brexit, Premier said it will start stockpiling ingredients and packaging to ensure Britain does not run out of store cupboard favorites in the event it crashes out of the European Union without a deal.
It added the plan could hit working capital in the fourth quarter by up to £10m ($12.9m), but it expected to recoup this in the following financial year as the situation normalizes.
Premier maintained its profit expectations for the full year.