Premier Foods H2 2026 Earnings Report

Premier Foods EPS Results

• Actual EPS: GBX 15.80
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Premier Foods Revenue Results

• Actual Revenue: $1.18 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Premier Foods Announcement Details

• Quarter: H2 2026
• Date: 5/14/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, May 14, 2026
• Conference Call Time: 4:00AM ET

Premier Foods (LON:PFD), together with its subsidiaries, manufactures and distributes branded and own label food products in the United Kingdom, other European countries, and internationally. The company operates through Grocery, Sweet Treats, and international segments. It offers a portfolio of product categories, including flavorings and seasonings under the Bisto, OXO, Paxo, and Saxa brands; cooking sauces and accompaniments under the Sharwood's, Loyd Grossman, Spice Tailor and Homepride brands; quick meals, snacks, and soups under the Batchelors and Smash brands; ambient desserts under the Ambrosia, Bird's, and Angel Delight brands; and ambient cakes under the Mr Kipling and Cadbury brands. The company also provides dumplings under the Atora brand name; plain flour under the Be-Ro brand; dried milk under the Marvel brand name; plain and self-raising flour under the McDougalls brand; and plant based food under the Plantastic brand name. It offers its products through supermarkets, discounters, convenience stores, and wholesale and food service facilities, as well as through e-commerce channels. The company was founded in 1975 and is headquartered in Saint Albans, the United Kingdom.

Premier Foods H2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Premier Foods reported strong full-year growth, with revenue up 2.5% to £1.175 billion and branded revenue up 3.4%, driven by a powerful second half and continued market share gains in the U.K. and Australia.
• Positive Sentiment: Trading profit exceeded raised guidance, rising 6.7% to just over £200 million, while adjusted EPS increased 8.7% as lower interest costs supported earnings growth.
• Positive Sentiment: The company generated over £150 million of free cash flow and reduced net debt to £95 million, bringing leverage down to 0.4x despite higher capital spending and the Merchant Gourmet acquisition.
• Positive Sentiment: Management highlighted strong progress on its 5-pillar growth strategy, including 7%+ branded growth in sweet treats, more distribution points, and successful new-product launches such as OXO bone broth, Mr Kipling innovation, and FUEL10K extensions.
• Positive Sentiment: The board plans to introduce an interim dividend starting this financial year and raised the final dividend by 20%, reflecting confidence in cash generation, balance sheet strength, and improving pension-related cash flows.

Presentation

[Alex Whitehouse, CEO at Premier Foods]

Well, welcome to Premier Foods full year results. That's for the 52 weeks that ended on the 28th of March this year. As always, I'm here with Duncan, our CFO, and what we'll do is the usual double act. I'll take us through some highlights. Duncan can then run us through all the financials, and I'll come back and show you the progress we've made against our 5-pillar growth strategy this year. At least I was hoping that's what I was gonna do. Okay. You might remember that we had a really strong quarter three, and a really strong Christmas, really important period of time for us, of course, with some really strong second half branded growth. Well, that carried on through quarter four.

[Alex Whitehouse, CEO at Premier Foods]

Actually quarter 4 branded growth in the U.K. was up 5.1%, and that brought the second half to 5% overall. There's a bit of phasing there from Easter. We had a really strong Easter as well. Easter falls into our quarter 1, actually the shipments go out largely in quarter 4. Remember that an early cold Easter is generally good for us because that means more people are eating roast dinners and less people are getting the barbecue out. An early cold Easter was good, that helped us as well, and we took quite a lot of market share there as well. That led us to more profit delivery than we expected.

[Alex Whitehouse, CEO at Premier Foods]

We raised our guidance after that strong Christmas at the end of Q3, but that strong Q4 came in better than we thought. Therefore, profit came in overall better than those raised expectations. The other bit of interesting news we've got today, it was given the continued strong performance of the business, our strong cash generation and the strength of the balance sheet, the board is currently planning to introduce an interim dividend, starting with the current financial year. That'll be off the back of our half year results this year, when we talk about those next November. If we run through the headline numbers, revenue came in at GBP 1.175 billion. That's up 2.5% versus year ago.

[Alex Whitehouse, CEO at Premier Foods]

That second half being stronger, up plus 3.8%. Of course, importantly for us, because we focus on building the brands, branded revenue was GBP 1.042 billion. That was up 3.4% with that second half coming in more strongly at 4.7% growth. That included taking more market share. We increased our market share both in grocery and in sweet treats during the year. Not just in the U.K. actually, we also did that in Australia, which is our sort of biggest market outside of the U.K. Actually it's the only other market that we've got reliable data for. In the two markets where we've got good data, we increased market share, both grocery and sweet treats.

[Alex Whitehouse, CEO at Premier Foods]

That got us to that trading profit, which crossed GBP 200 million, up 6.7% versus year ago, and as I say, ahead of the previously raised guidance. Adjusted EPS at GBP 0.158 was 8.7% ahead of year ago. That runs faster, if you like, in terms of growth and trading profit because obviously we've got lower interest costs year on year. Free cash flow, GBP 153 million was up 9.1%. That helped bring net debt to EBITDA down to 0.4 times. That was a GBP 48 million reduction. Bear in mind, of course, that's after investing that capital back into our manufacturing infrastructure, which is obviously a core pillar of our strategy.

[Alex Whitehouse, CEO at Premier Foods]

It's also after the acquisition of Merchant Gourmet, which we completed during the year. Dividend for the last financial year then, is a 20% increase on prior year, so well ahead of earnings. As I say, the board is currently also planning to introduce that interim dividend from this year onwards. A nice set of financial numbers overall that we're really pleased with. At the same time, we also made good progress against our branded growth strategy. We've seen the left-hand side numbers. Now remember, that's growing the core U.K. Brands in the U.K. grew by 3.7%, 5% in half two. Infrastructure investment, we invested GBP 52 million.

[Alex Whitehouse, CEO at Premier Foods]

That was up 25% versus the prior year as we continue to invest into more projects in our manufacturing sites, which at the end of the day, makes us more efficient and helps fund the brand, the brand expansion. The third pillar of expanding into new categories, growth there was 37% as we continue to expand the business outside its traditional core categories into new areas. I'll come back to these in more detail later. In the international business, we made some really strong in-market performances and some really good progress, but it was offset by that reduction in stock of cake that's held in Australia, which I mentioned at the half year, and I'll come back and talk about that in a bit more detail. Then inorganic opportunities like the brands we've bought.

[Alex Whitehouse, CEO at Premier Foods]

We've bought three brands now in recent years. All performed fantastically well. Actually, they all grew by double digit. Merchant Gourmet is already running ahead of the acquisition model on which we, you know, based our acquisition. Really, really good, I think, progress against the five pillars. We thought it might be interesting to look at the numbers in a bit of context actually, and look at this over a five-year run because what you see is you see this consistent strong performance year after year after year. It doesn't really matter which KPI we look at. If you look at branded revenue at the top left, this is consistent strong growth, 7.7% on average.

[Alex Whitehouse, CEO at Premier Foods]

Trading profit in the middle top here, that's running actually ahead of the growth rate of revenue, and actually moving from 2021 GBP 141 million to the GBP 200 million that we've announced today. Similar position for EPS up to that 15.8p and indeed, free cash flow down at the bottom left there, moving from GBP 65 million in 2021, 2022 up to GBP 153 million today, so more than doubling over that period of time. And that obviously helps drive net debt to EBITDA down from the 1.7x to the 0.4 today.

[Alex Whitehouse, CEO at Premier Foods]

Finally on dividend per share, we introduced that actually in the previous period in FY 2021, a GBP 0.01 a share, and we've moved that up ahead of earnings every year with that big step up last year. Remember, that was the repurposing of the dividend match to the pensions. Obviously we've built on that by 20% this year. When I stand back and look at that, it's a good, strong, consistent performance over multiple years, and I think that just points to the robustness of the strategy and also the brand building model that sits behind it. With that, I'll hand over to Duncan and he can walk us through the numbers.

[Duncan Leggett, CFO at Premier Foods]

Thanks, Alex. Good morning everyone. I'll start off with a few sort of financial headlines. Firstly, trading profit we've just heard is ahead of the expectations we raised back in January. That's up 6.7% versus prior year. Alex has mentioned free cash flow, but, you know, generating cash has always been one of Premier Foods's strengths. It's actually previously, it's obviously gone to servicing the pension scheme and our debt. The good news is now we can invest it back behind the business and obviously that's helped reduce leverage down to 0.4x. As Alex just mentioned, really pleased to announce we're currently planning to introduce the interim dividend from this financial year, so that will be over and above the final dividend. It will come on top.

[Duncan Leggett, CFO at Premier Foods]

Obviously we'll share more details of that following the half year results in November. Moving on to financials, I think good progress across our key financial metrics. Looking at branded revenue, that's up 3.4%. We'll talk about it in a minute, but really good sweet treats performance. Again, some great innovation. Alex will give some examples of that later. A stronger second half for the grocery business. From non-branded perspective, we've seen that, you know, as we right-size that business, we have seen that declining year-over-year, particularly in grocery, which I'll come to. That leaves total revenue up 2.5%, up at GBP 1,175. Trading profit I've touched on. Adjusted PBT is growing further ahead of earnings and trading profit, so that's up 8.5% to GBP 184 million.

[Duncan Leggett, CFO at Premier Foods]

Again, as we've been building cash throughout the year, that's been earning a return. Our interest cost has been reducing. Back to free cash flow. It's over GBP 150 million, that's over 9% up year-on-year and more than double where it was 5 years ago, that's even after our pretty significant step up in capital investment. Obviously that allows net debt to be below GBP 100 million, I think for the first time. That is GBP 48 million lower despite having bought Merchant Gourmet. As you said, really delighted to be announcing a decent step up in dividend. We've always said, haven't we? We want to grow it, you know, grow it ahead of earnings very much been the case so far.

[Duncan Leggett, CFO at Premier Foods]

Proposing a 20% increase to the final dividend, and that will be more than triple where it was when we started. Looking at the performance per business unit. Grocery, as a reminder, that includes our international business, that we have branded revenue up 2.3%. You know, we've got good growth across many of our brands. I think particularly called out our acquired brands and all three of those are growing in strong double digits. Alex will talk a bit more about Merchant Gourmet later, but you know, that is performing ahead of plan already and obviously FUEL10K and TST continuing their strong trajectory. A much stronger second half with the branded business up 4.3%. Non-branded, as I mentioned, that does continue to go down.

[Duncan Leggett, CFO at Premier Foods]

We are rightsizing our non-branded business and actually if you look at it over the last five years, it's about 25% smaller from a revenue perspective, but it's twice as profitable. That probably gives you a bit of a feel for what we've been trying to do. This is the tail end of it. We haven't quite rightsized the grocery bit. Some of that will fall into continue into FY 2027, but much closer for sweet treats. Where does that leave total revenue? That's up 1.4% to GBP 860 million. You can see divisional contribution growing ahead of revenue. That's all about the benefits from the branded mix, from the capital investment and the efficiencies we're doing across the sites, as well as some, you know, some good strong control of our overhead cost base.

[Duncan Leggett, CFO at Premier Foods]

Sweet treats has had another fantastic year. Branded revenue is up more than 7%. That's for the second year in a row. Again, really good innovation. We'll talk about some examples. It's not just a record year for Mr Kipling, but Cadbury's has a great performance within this as well. Non-branded, we said this would right size, I guess, a bit sooner than the grocery business, and that's very much as it's played out. Non-branded is down 1% for the full year, and actually it was in growth for both Q3 and Q4. That leaves total revenue up 5.5% to GBP 315 million. Again, a great combination. This is the sort of P&L that clearly I love. Combination of the branded mix coming through, a load of volume going through the factories increases factory recovery and efficiency.

[Duncan Leggett, CFO at Premier Foods]

You can see divisional contribution growing 18% to GBP 42 million, and importantly, the divisional contribution margin, you know, eking up to 13%. Components of cash. Picking out the key ones. CapEx, GBP 52 million is pretty much where we guided. Looking forward, we're looking at probably GBP 55 million-GBP 60 million for the coming year, and that's very much a continuation of, you know, the big investments that we've announced in our Worksop, Carlton and Lifton sites, as well as a continuation of our cost out and efficiency projects. Interest down at GBP 16. As I said, that is all around, you know, getting a return on the cash we've been holding on our balance sheet.

[Duncan Leggett, CFO at Premier Foods]

You might have seen that post year-end, we've announced an amendment, an upsizing of our revolving credit facility, so that's now GBP 367.5 million, and we've extended the maturity from 2029 to 2031 as well. It makes sense we'll update interest guidance once we've refinanced the bond. Tax is GBP 14 million, so we continue to benefit from the brought forward corporation tax losses, and we're guiding to a similar amount of cash tax for the coming year. Acquisitions, you can see the GBP 46 million net of cash for Merchant Gourmet coming out.

[Duncan Leggett, CFO at Premier Foods]

Looking forward into this year, we do have the payment of the deferred consideration on both the FUEL10K and Spice Tailor acquisitions, so that will be paid, and that's very much as we expected and according to plan for the coming year. All that takes us to net debt of GBP 95 million, so below GBP 100 million, which is great to see. Looking forward, I suppose, another couple of bits about FY 2027. First of all, it's a 53-week year, so there's a few quirks in terms of timing of working capital payments. Obviously, you know, with everything going on in the world at the moment, as you'd expect, we are monitoring political economic events really closely.

[Duncan Leggett, CFO at Premier Foods]

As you'd expect and as we've talked about before, we do have cover and hedging in place, which buys us time. That gives us an opportunity just to see how things are playing out, and of course, we'll then take a view, and we'll act accordingly. Pensions 2 new bits of news for pensions today. First of all, a bit of a recap as to where we've got to. We set in place this segregated merger about six years ago, which was the structure that we thought would benefit the pension situation. Thereafter, it's actually performed better than we expected, and we've got bigger benefits sooner. The main one of that was switching off deficit contribution payments two years ago. That would have been GBP 38 million we'd have paid this year had we not done that.

[Duncan Leggett, CFO at Premier Foods]

As a reminder, last year, the three sort of sections within the trust were still separate. We legally crushed them together. Now we have one scheme that's all net, and that enabled us to remove the dividend match, and that was reinvested back to the dividend, as Alex has just said. We've now finalized the triennial valuation, and we've agreed with the trustees that the company no longer needs to fund the administration costs of running the scheme. That's GBP 5 million in cash that we paid last year that we will not be paying this year or going forward. If you combine all of those, that's the best part of GBP 50 million annually that we would be paying into the schemes that we are no longer.

[Duncan Leggett, CFO at Premier Foods]

The other bit of new news with the valuation is we're seeing a small surplus on a buy-in basis. That is a bit better and a bit sooner than we expected, which is great positive news. Clearly it's early days, but there's a good chance at the end of all this there'll be some sort of surplus to share between the company and the trustee. Our capital allocation principles remain unchanged. I think it's a great example of how these have played out and how we've deployed the principles this year. A decent step up in CapEx, and Alex will talk about some of the projects that we've been investing behind shortly. That's up 25% to GBP 52 million. M&A, obviously Merchant Gourmet, I think that epitomizes the sort of brand we're after.

[Duncan Leggett, CFO at Premier Foods]

You know, it's future facing, fast growing, and performing really well, and it's actually doing a bit better than expectations so far this year, albeit early days. Very encouraged and pleased with how that's performing, as well as the other two as well, which we've talked a lot about. Dividends, we've always said that we were gonna start small. We acknowledged that, but it was important for us to progress the dividend faster than earnings. I think we've done that consistently over many years, and that culminates with another 20% step up in the final dividend this year, plus the introduction of the interim dividend. I guess you can think of the interim dividend being part funded by the administration fee saving on the pension scheme.

[Duncan Leggett, CFO at Premier Foods]

In terms of leverage, I mean, we talked a long time, didn't we, for the 1.5x target when we were way above that. Clearly that's a bit in the rearview mirror. I think, you know, I think the reality is we'll probably be operating between a leverage of 1-2x over the medium term. Obviously, timing of M&A will dictate where we are within that range going forward. Where does that leave us? Look, I think we're well positioned for growth. We are pretty profitable business, and I think we're proud of that. You know, we compare, I guess our branded growth model that we use is very comparable to the multinationals, and we see ourselves as a mini version of those. Our trading profit margins would be commensurate with those as well.

[Duncan Leggett, CFO at Premier Foods]

We very much see ourselves nestled, albeit a much smaller version of that peer set. Going back to free cash flow, I think it's a real strength, isn't it? That over GBP 150 million of free cash after having stepped up our capital expenditure so much. The good news is that with cash these days, as I mentioned earlier, we can deploy it in line with capital allocation principles and hopefully what I've just been through and how we've done that this year is a great example of the model working through and generating value. That's it for me, and I will pass back to Alex.

[Alex Whitehouse, CEO at Premier Foods]

Thanks, Duncan. As well as, I said that's, you know, strong financial performance that Duncan's just shared, we're really pleased with the progress we've made against the 5-Pillar Growth Strategy. I just wanna walk us through that progress pillar by pillar. Before I do, just a bit of a reminder of what the 5-Pillar Growth Strategy is and what sits behind it. What sits behind this is the concept that we believe that our core skill set is about building brands and growing brands in a profitable way over the long term. What we originally sat down and said to ourselves is, "Well that's great. We can do that with our existing brands and their existing categories in the U.K., but it only gets us so far.

[Alex Whitehouse, CEO at Premier Foods]

What else can we do with that skill set to actually generate more value and ultimately build a bigger Premier Foods over time. This is where this comes from. Actually, we do start here over on the left-hand side, focusing on building a strong growth out of our core U.K. brands because at the moment that's where the center of gravity is. It's really important we continue to do that clearly. The second pillar is investing into our supply chain. As Duncan talked about, this is investing into our operational infrastructure either to create the ability to manufacture some of the new products that we bring to market or, in order to make ourselves more efficient. More efficient means lower cost production.

[Alex Whitehouse, CEO at Premier Foods]

It means enhanced margins, and we use that P&L space to invest back in the brands to drive growth. In many ways, we see Pillar 2 as a facilitation pillar, a facilitation of growth. Pillar 3 is expanding within the U.K. into different parts of the store. A great example of that would be when we took Ambrosia, which we all know as being a desserts brand, like rice pudding and custard, and we took that into breakfast with Ambrosia porridge. That's taking the creaminess from Devon concept through into a creamy porridge from Devon, which has proved to be very popular, but it's all incremental revenue clearly because it's a totally different time of day to any revenue that we're generating in desserts.

[Alex Whitehouse, CEO at Premier Foods]

The purpose of this pillar is incremental revenue generation through participating in categories that historically we've not played in. The fourth pillar is about overseas expansion, so that's building businesses with what we've called critical mass, so building them to scale in our focus markets overseas, which are Australia, New Zealand, North America and Europe. The fifth pillar is buying brands which we can then apply our growth principles to generate significantly more growth than they've exhibited so far, and that they will that will get from our core as well. Obviously the new acquisition this year was Merchant Gourmet. Those are the 5 Pillars, and what sits behind them is what we call our branded growth model.

[Alex Whitehouse, CEO at Premier Foods]

If we think that our core skill is building and growing brands in a profitable way, this is how we do it. At the top left, we are really fortunate that in the U.K. we've got really brilliantly well-known brands, with leadership positions in their categories, very high household penetration. If we were to randomly knock on some doors this afternoon and ask to see what was in people's cupboards, we would find that most households would have several Premier Foods products in the cupboards statistically speaking. The other thing we've learned about the brand portfolio over the last few years is that despite the relative vagaries of the external environment, the portfolio is really resilient, and that's because at the end of the day, we're selling relatively low-cost products.

[Alex Whitehouse, CEO at Premier Foods]

The cheapest way to feed yourself is to actually cook for yourself at home, and if you do that, then you're tending to use some of our products. We've proven to be pretty resilient in the ups and downs of the global environment. Obviously great brands, but on their own they don't grow unless you do something with them. The 3 kind of key levers we've got for growth are new product development. This is a really important part of our model. We constantly have a stream of new products that we bring to market that are based on our in-depth understanding of consumers.

[Alex Whitehouse, CEO at Premier Foods]

We spend a lot of time and a lot of energy talking to consumers, understanding how they're shopping, how they're cooking, how they're eating, and how that's changing over time because change gives us the opportunity to bring new products to the consumers that fit into that, those changing habits. Then we continue to invest behind the brands as well. It's great that we've got really well-known and well-loved brands, but they won't stay like that if we don't keep investing behind them. We invest in marketing and advertising to build the brands, maintain the awareness, keep them contemporary and relevant, and more and more in digital channels to target younger audiences. Finally, but really importantly, bottom right are our partnerships with our key retailers.

[Alex Whitehouse, CEO at Premier Foods]

We work on the principle that if we can work in partnership and strategic relationships with our key retailers, then we disproportionately benefit because we've got leading positions in those categories. We're essentially working together to create category expansion, and we're getting most of the benefit from that because we've got the leading brands. That's the branded growth model. The next question obviously is, well, how have we done in implementing that over the year in the U.K.? You can see on the left-hand side how the growth built during the year. Remember, at the beginning of the year, our grocery business was held back a little bit by the really hot spring.

[Alex Whitehouse, CEO at Premier Foods]

We grew quite strongly as we went through into the second half with that really strong Christmas and a strong quarter four as well. We continued to take market share, as I said at the beginning. If you look at the graph on the right there, what that shows is actually how our market share was built over the last four years. The market share we've increased this year is based on an increase the year before, is based on an increase the year before. I think what this is telling us is that our brand-building model, when we execute it well, really works and is able to deliver consistently strong performance that's ahead of market.

[Alex Whitehouse, CEO at Premier Foods]

We also introduced a series of new products, of course, during the year, as I said earlier in the year, we had a particularly strong line-up of new products this year, and we've been pleased with their performance. I've just put a snapshot of them on here. I won't go through them all in the interest of time, but there's one or two things I'll pick out. Bone broth is a really good example. OXO bone broth. We spotted bone broth as a trend a few years ago in the United States, and we thought this was gonna work really well under OXO. We brought that to market earlier this year, and so has proven to be the case.

[Alex Whitehouse, CEO at Premier Foods]

This is a really great example for me because we've got a really well-known mature brand in OXO, and we've now got a really on-trend new product format, which is completely transforming the growth rate of the OXO brand. The other things I'd point out is really these three new product ranges for Mr. Kipling. As Duncan said, we had a really strong branded performance from our cake business this year, 7.3% branded growth, and it's really been strongly driven by the innovations, three of which are on here. You've got Mr Kipling Breakfast Bakes, which were introduced about a year ago and have continued to grow really strongly.

[Alex Whitehouse, CEO at Premier Foods]

That was an intentional effort to get Mr Kipling into the morning because we realized that most of our consumption was taking place from lunchtime onwards. There was a whole part of the day where the brand really wasn't present. You also might remember we talked a year ago about birthday cake tarts. Mr Kipling Birthday Cake Tarts, this is taking, again, from the States, a trend we've seen for birthday cake as a flavor rather than necessarily a birthday cake. Those have performed really well. We've actually expanded several flavors into that range. Now it's actually lapping itself, still delivering really great growth.

[Alex Whitehouse, CEO at Premier Foods]

The new thing this year was a range of these tubs of small Cake Bites, and this taps into a trend for people still wanting an indulgent treat but actually only wanting something small and often wanting to share that with other people. It's really those three have been the backbone of that really strong branded growth from our cake business. I must just mention Bubble Jelly. Again, this is another example of a brand, Angel Delight, that's been around for a long time. Very well known, a very mature brand, which is now demonstrating lots of growth because we've got a very on-trend product with Bubble Jelly.

[Alex Whitehouse, CEO at Premier Foods]

If you're not familiar with Bubble Jelly, it's based on bubble tea, and if you're not familiar with bubble tea, it's because you don't have kids the right age. That's probably what I'd say there. Of course, we're always basing, as I say, on consumer trends. There are four key trends that we talk about a lot. Health and nutrition, which is a key driver for us and has been for many years. Convenience and on the go, premium and indulgence, which actually premiumization's proven to be a really big thing, and packaging sustainability. That's not an exhaustive list, those are probably the big four that we focus on. I said that we continue to support the brands and we use a variety of tools for that.

[Alex Whitehouse, CEO at Premier Foods]

We continue to use TV advertising because we're bought by millions of people a day. It's important that we're able to talk to millions of people a day, and TV's still the only medium that can really do that. We augment that with other tools like out of home, where we're particularly targeting your routes to the store, so it's bus stops and it's poster sites around stores. We often use that actually to remind people of new products. More and more social and digital media, where we're targeting a younger demographic and trying to recruit those younger consumers into the, into the brands from the start of their cooking journey, if you like.

[Alex Whitehouse, CEO at Premier Foods]

The other interesting thing I find with this as well is that the getting costs for the brands are a lot lower, it actually allows us to support some of the smaller brands like Angel Delight with social media in a way that obviously it would never make sense to put a TV campaign behind it. Continue to support the brands really strongly and also getting great execution in store, which is obviously the related to those strong retail partnerships. On the left there, you've got the increase in distribution points that we achieved this year. This is a measure of how many products we've got in how many stores compared to the prior year. We're able to increase that by 4.7%, which I think is a really strong statistic.

[Alex Whitehouse, CEO at Premier Foods]

Grocery was really strong at 3.5%, that's 3.5% more products in more stores. I think that's a really great number. Even that is dwarfed by quite staggering 12% increase in distribution on our sweet treats business. That is driven by the fact that we've had this great lineup of new products that have performed really well and therefore have deserved the shelf space in store, and it's coming on top of what we'd got on the core range. We've got some gratuitous pictures of massive in-store displays. We relaunched the Batchelors brand in Q4, new packaging, new advertising, new products, and we got some really staggeringly big displays in some of the bigger stores as what were part of our in-store theater program.

[Alex Whitehouse, CEO at Premier Foods]

Then here I've got a just a really nice picture of some of the displays we got up over Christmas, so that's actually across our different brands. You've got OXO, you've got Bisto, you've got Paxo, and you've also got Ambrosia all on the same display on the run-up to Christmas. All the things you need to help make your Christmas dinner from Premier Foods all in the same place. Continued great execution in store. We get asked a lot about what we think the impact of GLP-1 will be on the business. I thought, "Okay, well let's do a slide on it then, and I'll talk you through where our head's at." For us, we are seeing this as a net opportunity rather than a net risk. The logic behind it is as follows.

[Alex Whitehouse, CEO at Premier Foods]

When this first started to emerge, we sat down and thought about our portfolio, and we thought, well, if you look at our grocery business, what we're essentially doing is we're making products that people use as part of putting a family meal together. That's bought as part of the family shop, and it's part of the family meal creation. In all probability, that's still gonna happen even if one person in the family is not going to eat as much of it. Well now there's enough people out there who are on these medications that we can find them and talk to them in our market research. We've spoken to people, and they're telling us that's exactly what they're doing. That family meal's still getting made.

[Alex Whitehouse, CEO at Premier Foods]

If you're using a jar of Loyd Grossman pasta sauce to make your pasta, that's still happening. It's just one person's maybe not having as much as they would have had in the past. The bit we didn't expect is the bit I've got down the bottom left there, is talking to these people, and this is now statistical rather than qualitative research, is there is a significant decrease in the amount of out-of-home eating that people on GLP-1 do. If you look here, we've got 50%, 60% decreases in the amount of eating in pubs, restaurants, and takeaways. They're telling us that that's because they've got much more control over the food when they prepare it themselves at home.

[Alex Whitehouse, CEO at Premier Foods]

If we've got a whole bunch of families therefore much more likely to eat at home, I've got to believe that that is actually going to play into our hands because obviously that's what we do. The other thing that's quite interesting is that we know that people on GLP-1 medications are much more likely to be seeking increased levels of fiber and increased levels of protein. Of course, we've bought brands that are absolutely bang on in those areas with FUEL10K, which is a protein-based brand, and Merchant Gourmet, which is fiber and protein. I think actually there's a really interesting opportunity for those two brands with people who are on GLP-1 meds. The one area we thought this might need thinking about is sweet treats, because logically, you might think people are gonna eat less cake.

[Alex Whitehouse, CEO at Premier Foods]

If you look across the last 10 quarters, we've got an average growth rate of 8.1% from our sweet treats brand. I have to say at this point, we can't see anything, but quite the opposite actually. When we look into the usage habit, in reality, it's not actually that surprising. That's because if you look at how our cakes are consumed and purchased, they're not on-the-go snacking. They're a box of cakes that's bought as part of the weekly shop, that's brought home, and generally speaking, left out on the countertop, and different members of the family will eat them as they go past, make a cup of tea, whatever.

[Alex Whitehouse, CEO at Premier Foods]

We think what's happening is that purchase is still happening, that box of cakes is getting taken home and put on the kitchen counter, and maybe 1 person's not getting their fair share. Which actually is what I feel like at home often if I'm not, if I'm not pretty quick off the mark. That tends to happen to me as well. The other thing that was also quite interesting is we have got a product that plays into this area with that new range of the Cake Bite tubs, because we do know that people on GLP-1 are telling us they do want the occasional treat, but they just want it to be small. We think that that range will basically play into that.

[Alex Whitehouse, CEO at Premier Foods]

Overall, as I say, it is still early days, but we are seeing net opportunity here rather than net risk. If I move on to the second pillar, this is that, as Duncan said, investing back into, excuse me, our manufacturing infrastructure. On the left-hand side, you can see how we have increased our capital investment over the last 4 years. If I look on the right-hand side, I have got some really nice examples of some of the big initiatives that we are currently working on and were working on last year. The top one is a new manufacturing line in our Carlton cake factory, and that is going to make Mr Kipling apple pies and cherry pies and things and fruit pies.

[Alex Whitehouse, CEO at Premier Foods]

What this is is a completely brand-new line, much more up-to-date technology than what we've had in the past. It runs much faster and therefore makes the cakes at a lower cost. What's also interesting about it, with that more modern precision technology in the engineering, we can actually control the process of making the pies much more tightly, so we can ultimately get a better quality product as well. Armed with the knowledge of what this machine can do, what our marketing team have done is they've worked with consumers to try and optimize what the perfect apple pie looks like.

[Alex Whitehouse, CEO at Premier Foods]

What does that mean in terms of the pastry, its thickness, how well it is baked, how crumbly it is, how big should the apple pieces be inside, how many of them should there be, and what should the sauce be like? Putting all that together to come up with what we think is the best apple pie we can possibly produce because the machinery has got the ability to make it with that level of precision in a consistent way. The win-win here is consumer gets a much better product, and it costs us less to make it. Boilers are quite an interesting topic. We have big steam generation in our Lifton plant and also in Worksop where we use the steam for the cooking processes.

[Alex Whitehouse, CEO at Premier Foods]

What we've done is we've replaced our old boilers, or in the process of replacing I should say, our old boilers with some much smaller, much more modern, much more efficient boilers. We use less energy, we create less CO2, but also from a capacity point of view, we therefore are now below the threshold, so we don't have to pay the Energy Profits Levy. It's a sort of like a second saving on top of the saving we're getting from using less gas. Finally down the bottom, we've just highlighted as part of our solar rollout, the solar farm that we've installed at the Worksop site.

[Alex Whitehouse, CEO at Premier Foods]

We've got 3,500 solar panels in a field that we own, that's next to the site, and this can supply up to 70% of the site's energy requirements when you get a sunny day in Barnsley. Moving on to new categories. Sales up 37%. Still a relatively modest base, but actually, you know, won't be if it carries on growing double digit like this every year. Ambrosia porridge we talked about before. That was the first big success we had in this area. 19% growth last year. It's in all the major retailers. We've got five different flavors now. This actually becoming quite a decent size business in its own right now. Cape Herb & Spice continued to grow, 23% up.

[Alex Whitehouse, CEO at Premier Foods]

Achieved more distribution, also increased its market share. The new product this year was FUEL10K going into yogurt. We've got a protein-enriched yogurt with the leading FUEL10K granola on top. That's obviously in a completely different part of the store. It's in the chiller with all the rest of the yogurts, of course. It's a completely different new part of the store for us, incremental revenue again because that doesn't cannibalize any of our existing revenue streams. Really good progress there and three things that we'll continue to drive quite hard this year. If I move on then to the fourth pillar, that's building our businesses overseas.

[Alex Whitehouse, CEO at Premier Foods]

As I said, we made really good progress across a number of the markets, but this was offset by that reduction in stock holding in Australia. Actually revenues were 1.8% lower than year ago. That's clearly not what we planned. If you look beyond that at the rest of the businesses, on aggregate, they were up 10% year on year, which broadly is what we would have expected. If I look at each region in turn, Australia, New Zealand, the actual performance of Mr Kipling in market remains really strong. We had 10% growth on a retail till scan point of view as measured by Circana. We continued to increase our market share, and we actually had record household penetration getting up to 21.3%. There is no business health issue here.

[Alex Whitehouse, CEO at Premier Foods]

It really is just about the amount of stock held in market which is held by the retailers. We also grew double-digit in our Indian and Asian sources business in Australia, and we continued to take market share with those as well. At the same time, we made some really interesting progress, I think, in the U.S., where sales were up 17%, and that's as we took the Mr Kipling apple pie and cherry pies into a region of Kroger, where they've performed really very well. On the back of that, Kroger's also now taking the slice range, which has gone into store literally last week. I'm afraid it's so new, I don't have any performance data to share with you on that.

[Alex Whitehouse, CEO at Premier Foods]

We're certainly very pleased with the apple pies, and hopefully then the slices will add on top. What we'll do then is look to roll out into more regions over time. The pack of eight lemon slices here is a new pack format for us. So we normally sell in 6s of those in the U.K. This is a larger pack size we've done for Walmart in the States. We've got a test running in Walmart in the States in 560 stores with the lemon slices and also chocolate slices. I've seen the data on that, and it's actually off to a pretty good start. We're quite encouraged by everything that's happening with the cake business in the U.S. at the moment. Then moving on to Europe.

[Alex Whitehouse, CEO at Premier Foods]

Europe grew by 9%, and it was particularly strong in the second half of the year as we started to take FUEL10K granola into a couple of European countries. We took that into market in Q4, and we went into 1,000 stores of Albert Heijn in the Netherlands and actually also into the Delhaize stores in Belgium as well. Now we're in about six other countries in Europe as well. That's kind of the next big thing for FUEL10K is expansion overseas. At the same time during the year, we actually also made some good progress on Sharwood's in France, where we've now gone into a total of six retailers, and we've got 5,500 distribution points.

[Alex Whitehouse, CEO at Premier Foods]

Finally, the 5th pillar, which of course is M&A, and we continue to look for more acquisitions in this area. What we're looking for are future-focused brands which we think will scale up to be big brands of the future through the application of our branded growth model. I think The Spice Tailor, FUEL10K, and Merchant Gourmet are all really great examples of that. I can't stress enough how fussy we are here and the amount of energy and analysis that we put behind these things before we go forward on them because what we're doing is we're validating that they fit the criteria such that when we apply the growth model, we will get that expansion and that scale up, over time.

[Alex Whitehouse, CEO at Premier Foods]

At the same time, of course, we put strong financial filters over that, strong disciplines, and particularly on return on invested capital. If I look at the acquired brands that we've made so far, Merchant Gourmet, as Duncan mentioned, did better than we anticipated in the year. On a pro forma basis, it delivered GBP 30 million of turnover. You might recall that when we bought it, we said we thought it was going to do about 28, so it's done about 7% better than we planned, which is a great start. Where we see the opportunities here initially are in expanding distribution. Just like with The Spice Tailor and FUEL10K, its performance in market deserves more shelf space and more ranging than it's got.

[Alex Whitehouse, CEO at Premier Foods]

One of the things what we'll be doing is looking to work with retailers to expand the amount of shelf space we've got. We've also got a strong innovation pipeline coming up, some of which is in existing categories and some of which is expanding into new categories. As the brand grows, as we've done with FUEL10K and The Spice Tailor, we'll increase the brand investment. It's following our overall brand and growth model. Very briefly on both FUEL10K and The Spice Tailor, they both performed double-digit in the year, they both continued to increase market share, and they both benefited from a series of new products that we brought to market as part of our innovation program. I will just call out, though, the FUEL10K core granola product.

[Alex Whitehouse, CEO at Premier Foods]

This is the number 2 granola in the U.K. The chocolate SKU is the fastest-selling, and the top SKU in the granola category in the U.K. This thing just keeps on growing. We've actually introduced a large size of the chocolate product, given how well it sells. It's a real star within that brand. If we change gear and just have a look at the plans for this year, as you would expect from us, there's lots happening across the pillars. We've got a lot of new products coming to market, most of which are gonna take place later in the year. Commercially, I'm gonna keep quiet about those. The ones that I can talk about are the ones that are a little bit closer in.

[Alex Whitehouse, CEO at Premier Foods]

On the top left there, you've got Merchant Gourmet going into baked beans with a range of three flavors of gourmet beans. We've got Ambrosia on-the-go custard, so it's a little squeezy pouch, and you've probably seen them in other products, of custard and chocolate custard. And then one that I also think is quite interesting down the bottom there is Mr Kipling Birthday Cake Slices. Again, that's building on the success we've had with the Birthday Cake Tarts, taking it into slices, whereas in fact, slices are our biggest format within Mr. Kipling's. That could be really interesting, but it's not quite in market yet.

[Alex Whitehouse, CEO at Premier Foods]

In terms of infrastructure investment, two of the biggest projects we've got at the moment are expansion of capacity down in our Lifton plant with a new process plant, and I've mentioned that 1 before. It's really expanding our capacity to be able to make more porridge and also free up space for some of the new products that are coming down the line, which we're going to need the capacity for. Then in Worksop, we've got a significant expansion of our sauces manufacturing capabilities, and that will allow us to manufacture the Loyd Grossman sauces ourself. They were previously made externally. As you can imagine, there's quite a significant margin improvement when we make that ourselves rather than paying someone externally to manufacture it.

[Alex Whitehouse, CEO at Premier Foods]

On the new categories, we'll continue to push all three of the successes that we've got. Ambrosia porridge, interestingly, we're going to introduce a six-pack. The purpose for this is that actually the usage habit is once people start to enjoy these, they'll tend to buy several a week. What they tend to do in a lot of cases is pop one in their bag on the way to work, and they eat it when they get to work. Well, that obviously only works if you've got some spare ones in the cupboard. If we can sell you a six-pack, there's much more chance that you've got some spare ones in the cupboard so that you can pop one in your bag and take it to work with you.

[Alex Whitehouse, CEO at Premier Foods]

Then of course, we'll continue to build on that initial success we've got with the FUEL10K yogurts with the granola on top. In particular, we'll be looking to build more distribution and get that out into more stores during the year. Then from an overseas perspective, key focus area is obviously going to be the continued rollout in North America of those pies and slices, building on that success we've had in Kroger.

[Alex Whitehouse, CEO at Premier Foods]

Europe, a lot of focus on the recent launch of FUEL10K and making sure we've got the right support models behind that, as well as building on that Sharwood's distribution increase. One of the new things in Australasia is the rollout of Mr Kipling apple pies, because believe it or not, we actually don't have apple pies yet in Australia. That's a new thing that will go into market this year. In parallel to that, of course, we're always looking for what that fourth acquisition brand is going to be. That's all I can really say on that one at the moment, of course. Lots of activity across all the pillars. Where does that leave us then?

[Alex Whitehouse, CEO at Premier Foods]

I think we've had another really good year, good branded revenue growth, particularly in the second half. Strong earnings progression with that trading profit crossing GBP 200 million, and ahead of the already raised guidance. Strong free cash flow, getting our leverage down to 0.4x. Of course, we've got that 20% increase in the dividend that we've announced. As you've seen, good progress against the five-pillar strategy as well. In terms of outlook, look, we'll continue to deliver further profitable branded revenue growth, and that's through leveraging that branded growth model. We've got a strong pipeline of new products and brand support planned for this year, of which I've shown you a little bit of the front end of.

[Alex Whitehouse, CEO at Premier Foods]

We'll continue to leverage the benefits that exist for Merchant Gourmet since we made the acquisition, as well as looking for further acquisitions. Then in terms of outlook, look, I'm always aware of the fact that I'm having this conversation with you halfway through our first quarter, so I know what that looks like, and you don't. What can I say at the moment? I mean, we're exactly where we expected to be, so, you know, we're on track. Our expectations therefore for this year, remain unchanged at this point. Thank you very much again for your time, and Duncan and I would be very happy to take any questions. Thank you. Goodness. Charles, let's start here.

[Charles Hall, Analyst at Peel Hunt]

Charles Hall from Peel Hunt. Alex, can you just talk a little bit about the U.K. market, how you see consumer demand, how retailers are responding, and also cost inflation and what you might need to do on pricing?

[Alex Whitehouse, CEO at Premier Foods]

Yeah, sure. This is a very obvious question to ask us, actually we've got a very unexciting answer in that I'm not seeing any dramatic change in consumer habits, certainly not that's affecting us. I think part of that might be because of that portfolio resilience we've talked about. What we've seen in the past is, you know, maybe we do lose some consumers to private label down at the bottom end, then we gain some consumers who eat out less. You know, if things get really difficult, that's what we'd expect to happen. At the moment, I'm not really seeing anything.

[Alex Whitehouse, CEO at Premier Foods]

From a cost inflation point of view, you know, at the moment, we, you know, we've got, as you would expect, longer term contracts and hedges and things in place, which buys a bit of time. At the moment, we're just watching and waiting to see what happens with the Iran conflict, and we'll take action if we need to.

[Charles Hall, Analyst at Peel Hunt]

Then on the international side, you're building out distribution points across quite a lot of countries now. Are you able to now put more resource into those countries to hopefully get to some tipping point in terms of the rate of growth?

[Alex Whitehouse, CEO at Premier Foods]

Yes. I don't necessarily think it's a function of resource, though, at this point. It's a function of perseverance and making sure we're getting the distribution and then putting the support behind that distribution once we've got it. I think in terms of people, we're pretty comfortable with where we are. We've got a team on the ground in Australia. We've got a team on the ground in North America. Then we're gradually putting regional heads into different parts of Europe, and I think that model's working pretty well.

[Charles Hall, Analyst at Peel Hunt]

Great. Thanks.

[Alex Whitehouse, CEO at Premier Foods]

Yeah, sure.

[Analyst]

Morning. Thank you both. First question, just in reference to the grocery distribution points and the sweet treat distribution point data that you've provided. Just wondering if you can provide a bit of color with respect to the phasing of how that distribution point expansion has played out through the year. Also, if you can just provide some color as to whether it's primarily those new products and new categories that are filling those additional distribution points or if it's the broader portfolio. I guess what I'm interested in is whether or not the phasing of the expansion in the distribution points has played a role in accelerating growth throughout the year.

[Alex Whitehouse, CEO at Premier Foods]

Yeah, it's a good question. I mean, the expansion of the distribution points is largely led by the new products, but though that distribution coming on top of the core range rather than necessarily substituting large portions of it. Therefore, whilst I don't have the numbers in my head in terms of exactly when it happened, but it's reasonable to assume that will have happened with the rollout of the NPD, which tends to be a function of when the retailers change their shelf layouts, which actually for most of our categories tends to happen around the middle of the calendar year. It might help play into that.

[Analyst]

It does help. Thank you. Next question, just in reference to, you know, the trading profit outperformance that you’ve delivered today. You’ve delivered efficiency projects, which has clearly assisted in that outperformance, but there’s also been these rollout of these new products that we’ve just touched on. Can you provide a bit of color as to, you know, how much of that outperformance relates to the projects you’re undertaking relative to potentially a better mix effect of the products that you’re selling?

[Alex Whitehouse, CEO at Premier Foods]

I mean, certainly we know that the new products that we bring to market are key drivers of our growth cause they provide a largely incremental revenue stream. That plays into a lot of the top line delivery, as does the higher growth levels from the brands that we've acquired. I think particularly if you look into sweet treats, the strong performance in our sweet treats business has dragged incremental volumes through the factories, which of course makes the factories more efficient and we get the factory recoveries associated with that, it plays in quite strongly to profit delivery.

[Duncan Leggett, CFO at Premier Foods]

I think if you, yeah, and then play over the things you said, Matthew. You know, benefits of the CapEx investment, which has stepped up further this year, and the sort of well-established supply chain sort of cost and efficiency program, even outside of CapEx. As you'd expect, you know, we've got a pretty tight control over the overhead cost base. I think all those things come together, give you the profit delivery you're seeing.

[Analyst]

Okay. Excellent. I'll pass it on. Thank you.

[Alex Whitehouse, CEO at Premier Foods]

Thanks.

[Matthew Webb, Analyst at Investec]

Morning, everyone. Matthew Webb from Investec. First question, just going back to cost pressures and price increases. You say that you've got a sort of period of grace while your contracts run through. I just wonder how, roughly how long that is? To be specific, does it give you the whole of the rest of this calendar year, i.e., taking you through to the next sort of scheduled round of annual price increases, or might you have to move a bit earlier than that?

[Alex Whitehouse, CEO at Premier Foods]

Commercially, I don't want to get into the exact lengths of different hedges and things we've got. What I can say is that we've got some time in order to watch and see what happens. If we do have to increase prices, then, you know, reluctantly we would do. We've got a reasonably strong track record of being able to do that when we need to. You know, we'll have to see whether it's necessary or not.

[Matthew Webb, Analyst at Investec]

Got it. Thank you. One for Duncan, I guess. Just on the pension, you said you've got a surplus on a buy-in basis. Would you be willing to disclose roughly what that sort of surplus is at the moment?

[Duncan Leggett, CFO at Premier Foods]

I mean, I think, you know, it's pretty early days. I'd probably not wanna speculate in terms of sizing and what might happen. I think, you know, The scheme's trustees are doing a great job of running the scheme, and the scheme's a bit ahead of where we expected it to be. I think, you know, all positive news there. You know, the surplus is small, but there is a surplus, I suppose. All the work that everyone's been going into de-risking, it'll mean two things. One is, you know, sort of less likely to unwind. Two is the rate of growth will be slower than we've seen previously. I think, you know, those things all equal.

[Duncan Leggett, CFO at Premier Foods]

You know, certainly directionally positive, it is early days. If there's any more clarity we get further through the year or beyond, we'll obviously share it.

[Matthew Webb, Analyst at Investec]

Excellent. Thank you. Just on that point again, you've said that you would share the benefits of any surplus with the trustees. Would how that is divided up be subject to negotiation, or is it 50/50 or already set in some way?

[Duncan Leggett, CFO at Premier Foods]

Yeah, I think that would be very much wait and see. You'd expect it to be shared in some way, shape, or form. Yeah.

[Matthew Webb, Analyst at Investec]

Got it. Okay. Thank you very much.

[Clive Black, Analyst at Shore Capital]

Ta. Clive Black from Shore Capital. Another one for Duncan, I'm afraid, which I know is a boring question. Sorry, mate. How does your pension scheme situation dovetail with regulatory change? I mean, I respect the fact you can't speak about numbers, but how does that regulatory change it potentially enable the process here?

[Duncan Leggett, CFO at Premier Foods]

It's a good question. I suppose just as a recap, currently, you know, for any sponsor with any surplus, accessing it is pretty difficult. Technically the way legislation works at the moment is until the scheme is wound up, that's post buy-in, post buyout, then you wind it up, you can't get hold of any of that surplus. Again, going back to Matthew's point, it's a bit theoretical and ethereal at the moment, although albeit positive. We are hoping/expecting, one of the two, the government to clarify rules around sponsors accessing surpluses at some point during this calendar year. It may well be that under circumstances, and that'll be, one, around level of scheme funding and how much buffer there is. Second is what the sponsor might use it for.

[Duncan Leggett, CFO at Premier Foods]

It'll be probably investment related rather than rather than taking it out. There'll be probably some guidelines around what it can be used for. To the extent that does get clarified, that may mean people like us or others could put the surplus to work before the end of the scheme. Very much wait and see.

[Clive Black, Analyst at Shore Capital]

Thank you for that. Just two other quick ones. Firstly, you've made immense progress on sweet treat margin. How should we sort of take that going forward? Is that a new base? Is it a one-off? Can it go further?

[Alex Whitehouse, CEO at Premier Foods]

Do you want me to start with that?

[Duncan Leggett, CFO at Premier Foods]

Yeah, fine.

[Alex Whitehouse, CEO at Premier Foods]

I think we indicated a while ago that we expected that we would somewhat be able to close the gap between sweet treats and grocery. A large driver of that would be the automation process. The investment we're making into the manufacturing sites, you're seeing some of that benefit. What you're also seeing is actually just sheer efficiency growth through volume. I think we've just had so much success with the new product ranges that it's actually inherently making us more efficient through volume. It's a bit of both.

[Clive Black, Analyst at Shore Capital]

From what you said, for example, Carlton, the automation, that could be a further driver for sweet treat margin.

[Alex Whitehouse, CEO at Premier Foods]

Yeah, definitely. I mean, that, you know, there's no benefit from the new apple pie line in these numbers, and that will clearly come. Yeah.

[Clive Black, Analyst at Shore Capital]

Lastly for me, I respect again the fact, Alex, it's commercially sensitive, but in terms of marketing advertising, how did last year progress on the previous year, and kind of what's the trend there? With, maybe not with numbers.

[Alex Whitehouse, CEO at Premier Foods]

Yeah. I think what we've said before is that we know we're on a journey in terms of the amount of marketing investment we put behind the brands. Aspirationally, we want that to be a lot more. We've made some really great progress since we started this sort of six, years ago now. We're investing quite a lot more than we were, but there's still some left to go. We don't necessarily do it on a linear basis with the same amount every year. It tends to move in waves. But yeah, we're a good way down the journey.

[Clive Black, Analyst at Shore Capital]

Thank you.

[Andy Wade, Analyst at Jefferies]

Hi there. Andy Wade from Jefferies. A couple from me. First one on Australia. Obviously, the destocking process has gone on for a bit longer than we thought. I guess my two questions would be on it. One, I mean, just to flesh out a little bit, I mean, how much less stock are they carrying of yours now than they were previously? How confident are we at sort of getting towards the bottom? You know, is there any risk that although they're still selling through at the tills at the moment, their intention is to sell a bit less in future? Just sort of wanting to get as much as we can.

[Alex Whitehouse, CEO at Premier Foods]

Yeah

[Andy Wade, Analyst at Jefferies]

much color as we can on that.

[Alex Whitehouse, CEO at Premier Foods]

Yeah, that's a really helpful question actually, because look, I don't see that there's a risk around them wanting to sell less. It's really just a question of how much stock do they want to sit on in market in order to be able to provide against that. Bearing in mind they can't just call us up and just pop round with a truck the next day like Tesco can. You're talking about several weeks on the water. Getting the level right is clearly tricky. It's a bit opaque to us, if I'm honest with you. We can't see their system, so we can't see exactly how much stock they're sitting on.

[Alex Whitehouse, CEO at Premier Foods]

I suspect they've still got a bit too much, and I suspect there's still a little bit to come out of the system over the forthcoming months. What we've actually now put a logistics person into our Australian team to partner up with the logistics people at the two big customers, so that we can get a little bit more transparency and try and work with them and help them because it is inherent, and when you're shipping over those distances, I think there's an inherent lumpiness to it because you know, you're not sadly, you're not shipping every day. It tends to go in little waves. This is probably more, you know, probably more volatile than we would like.

[Alex Whitehouse, CEO at Premier Foods]

We're gonna work with them and see if we can kind of smooth it out a bit. Yeah.

[Andy Wade, Analyst at Jefferies]

Obviously important that they don't end up with not enough that you have availability issues.

[Alex Whitehouse, CEO at Premier Foods]

Exactly

[Andy Wade, Analyst at Jefferies]

You can't run with promotions and so on.

[Alex Whitehouse, CEO at Premier Foods]

Exactly. 'Cause then your reaction time is you haven't got the reaction time because you've got a ship that's got to get all the way from the U.K. Yeah, keeping the right amount is important. The question is what is the right amount?

[Andy Wade, Analyst at Jefferies]

Yeah. Okay. All right. Thanks. Then, second one, just sort of following a bit on from what Clive was asking around the margin side of things. Obviously, more going into capital investment and cost out projects being a big part of that as well. You talked about just as one example there, Carlton's still to come through and feed into the numbers. I'm just sort of wondering how we marry that up with what you've always talked about previously is that we're gonna run at a broadly flat-ish sort of margin. Is that sort of moving? Is that evolving a little bit such that we can see upside to that, or is it still the same and it plays back into the marketing point you were making earlier.

[Andy Wade, Analyst at Jefferies]

just how those all play out.

[Alex Whitehouse, CEO at Premier Foods]

Yeah.

[Duncan Leggett, CFO at Premier Foods]

High level investors

[Alex Whitehouse, CEO at Premier Foods]

I think at a principle level, and I'll let Duncan comment, we've always said, haven't we, that we'll take gross margin expansion and we focus really hard on that actually, not just from a factory investment point of view, but across a number of things. We will deploy that expansion into investment behind the brands, and sort of close that gap to our aspiration on marketing investment. You know, as you've seen over the last few years, actually, some of it's ended up dropping through and we've finished up with trading profit going a bit faster than top line.

[Duncan Leggett, CFO at Premier Foods]

I think that's right. I think, like, if you're taking probably a higher level look forward view, I'd probably still go down the, you know, you'd expect it, you know, pretty strong margins to be, remain broadly flat, and we'd use the expansion to invest back behind the brands. Clearly to Clive's point on sweet treats, you know, there are pockets of the business where we do think there's further to go. If sweet treats, you know, if we do continue with the volume and the NPD and everything else going through, that will probably just, you know, might help with sweet treats margin, but we'd probably use that to just reinvest back behind grocery.

[Andy Wade, Analyst at Jefferies]

Thank you very much.

[Analyst]

Thank you very much. Just as a follow-up to Andy's question then. Is that to interpret that comment then, is that to say that there was a limit to the marketing investment you could deploy this year, and that's why it dented the bottom line and that you weren't able to take those efficiencies and put them back into the market through marketing? To Alex Whitehouse's comment, will the benefit from that outperformance on profitability flow through to marketing in FY 2027 and there should be, you know, a commensurate benefit to sales growth as a result?

[Duncan Leggett, CFO at Premier Foods]

No, I wouldn't say. I mean, there's no real limit in terms of, you know, what we've been able to deploy between marketing. I think a lot of it comes down to, you know, when the benefits come through, when we have visibility of them, as well as, you know, we will only deploy marketing or any investment if it's the right time, we're gonna get the best return, and we can plan for it. Just it may be that we get some extra money coming through. It doesn't necessarily we'd spend it because if we're not spending it in the right way of getting the right return, then we wouldn't. No, there's a few bits of timing around, but generally, you know, the game plan is to invest back behind the brands for sure.

[Duncan Leggett, CFO at Premier Foods]

I guess with, you know, with anyone, any time when you close the year off, there's always bits. No, there's been no hindrance or lack of ability or desire to invest back behind the brands this year for sure.

[Alex Whitehouse, CEO at Premier Foods]

I think, you know, as I said at the beginning, you know, we had a really strong quarter four, and that's what took us to the position where trading profit ended up being above our already upgraded guidance. When you get that strong performance right at the end of the year, it's actually quite difficult to redeploy it into brand investment and do it, to Duncan's point, in an efficient and sensible way. If that happens at the beginning of the year, we've got a lot more time to plan and make sure it's well invested.

[Analyst]

That makes perfect sense. Thank you.

[Alex Whitehouse, CEO at Premier Foods]

Any more? No. Well, good luck. Thanks everybody for coming this morning. Good to see everybody. As you can see, it's been another good year for the business. you know, we're pretty optimistic and looking forward to another good year this year as well. Thank you.

[Duncan Leggett, CFO at Premier Foods]

Thanks all.

Participants

Executives

• Alex Whitehouse, CEO
• Duncan Leggett, CFO

Analysts

• Andy Wade, Analyst at Jefferies
• Charles Hall, Analyst at Peel Hunt
• Clive Black, Analyst at Shore Capital
• Matthew Webb, Analyst at Investec
• Analyst