While a year-on-year decline in first-half revenue for food producer Premier Foods (PFD) always looked likely, given the tough comparison with a period when lockdown boosted trading, that did not stop investors voting with their feet and the shares sank 5.3% to 108.1p.
The company booked a 39% drop in first-half profit after an easing of lockdowns prompted people to stop cooking as many meals at home.
Pre-tax profit for the six months to 30 September fell to £30.7 million, down from £50.5 million year-on-year, though this was still around double the figure posted in 2019, before the pandemic.
Adjusted pre-tax profit fell by a more modest 2.9% to £46.4 million, given that the bottom line had benefited a year prior from a one-off gain on the sale of the Hovis business.
Revenue slid 6.5% to £394.1 million, but was up 7.5% on a two-year view. Premier Foods continued to chip away at its debt pile, which had shrunk to £345 million by the end of September, down 14% year-on-year.
‘STRATEGIC PROGRESS’
The maker of Mr Kipling cakes and Bisto gravy said it had made ‘very good strategic progress’ in the first half, with revenue ahead of expectations.
It added that it was ‘firmly on track’ to meet profit expectations for the full year. Shore Capital analyst Clive Black commented: ‘We will revisit our forecasts in the New Year, depending upon trading.
‘For now, though, Premier's self-improvement continues, and the stock remains just too lowly rated compared to its peers, in our view. A clear set strategy provides Premier with multiple avenues to explore growth in its core and adjacent markets in the UK, bolt-on acquisition, and internationalisation.’