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Premier Foods has competitive edge in facing Brexit, says CEO

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Gill Hyslop

By Gill Hyslop+

16-Nov-2016
Last updated on 16-Nov-2016 at 14:36 GMT2016-11-16T14:36:48Z

Premier Foods, which manufactures a range of baking mixes under the Paul Hollywood brand, saw a drop in overall sales in the first half of the year.
Premier Foods, which manufactures a range of baking mixes under the Paul Hollywood brand, saw a drop in overall sales in the first half of the year.

Mr Kipling maker Premier Foods will be protected from the effects of Brexit, according to CEO Gavin Darby.

He said 89% of the company’s annual expenditure is conducted with UK suppliers. Only €50m ($53.5m) is paid to other suppliers across Europe.

“Premier has the advantage over our competitors of dealing mainly in pounds, while many of our competitors are counting in Euros and dollars,” said Darby, who reiterated that 95% of the company’s products are produced in the UK using local ingredients and suppliers.

In 2014, Premier restructured its business into three strategic units: Grocery, Sweet Treats and International.

Experienced a sales drop

Yesterday, the group confirmed its Q2 and H1 results that it reported on October 12.

Premier saw a 1.8% sales decline for the 26 weeks from April 3 to October 1, 2016. Its grocery sales fell 4%, but this was partly offset by a 4.1% increase in Sweet Treat sales and 9% in International business in Q2.

Darby said the country experienced 13 consecutive weeks of hot weather, each week progressively warmer than the next, which effected sales in many of the Grocery division’s categories.

The Met Office reported a 2°C increase over the first quarter of the year.

Lower gross profit

Darby reported that gross profits were down by £3m ($3.7m), from £127m ($157.8m) in F15/16 H1.I to $124 (154m) in F16/17 H1.

As expected, trading profit was lower than the previous year at £48m ($59.7m). The decrease of £2m ($2.4m) was partly due to increased marketing investment, it said.

Premier expects growth between 2-4% for H2 driven by planned product innovations. It anticipates profit will be unchanged.

Premier products

Among its stable of bakery brands are Mr Kipling, Cadbury cakes and Paul Hollywood, while other brands include Ambrosia, Batchelors, Bisto, Homepride, Loyd Grossman, OXO and Sharwood's.

Introducing Paul Hollywood

Early last year, the company launched its first new brand in 20 years when it partnered with master baker Paul Hollywood. The TV chef’s branded range includes sweet and savory artisan baking mixes.

Next year, Premier is relaunching its snack product ranges in a new sharing format, as well as releasing products featuring different flavours and recipes. Additional Cadbury cake products will be seen on shelves, too, including Choc Tarts.

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