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Premier Foods reports 6.1% drop in sales

Premier Foods reports 6.1% drop in sales

Challenging market conditions have been to blame for Premier Foods' drop in sales.

The company, which owns brands such as Mr Kipling, Bisto and Ambrosia, noted a 6.1 per cent decline in sales in its half-year results to June 30th. Trading profit grew by 2.1 per cent to £48.1 million during the period but was hampered but the overriding decline in revenue. Premier is now hoping for an improved second half of the year to help compensate for the disappointing performance in the opening months of 2014.

Analysts highlighted Premier's declining power brands which saw a 4.9 per cent drop over the period. The company noted that the combination of the warm weather and the growth of discounters, who have been able to compete when up against the more traditional brand names, has affected sales.

Nicola Mallard at Investec said: "The group had already flagged the difficult revenue background and we had assumed a small decline in first half trading profit of £47.1million last year, but the group delivered £48.1million. This showed a one per cent increase in margins to 13.1 per cent as cost savings were delivered.

"Revenues were 6.1 per cent lower overall, which was in line with our forecasts, and, within this, the power brands were 4.9 per cent down."

There has been a shift in trends in the retail sector with the more traditional supermarkets facing increased competition from discount stores such as Lidl and Aldi. The likes of Morrisons and Asda have announced restructuring processes in recent months with a number of redundancies being made, while Lidl and Aldi have prospered.

Sainsbury's is aiming to combat this threat by teaming up with Danish retail group Dansk Supermarked to bring Netto back to the UK. The company said that 15 stores are expected to be opened during 2015 with the north of England being the main focus of the campaign.

 

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