Premier Foods (LON:PFD) Issues Earnings Results

Key Points

• Premier Foods reported first-half branded revenue growth of 3.2%, trading profit growth of 2.4%, and adjusted EPS growth of 4%; it raised adjusted PBT and EPS expectations to the top of its range, helped by lower interest costs.
• Free cash flow rose nearly 44% year over year, net debt fell by more than £70 million, and leverage was 0.6x. The company also introduced a 1.12p interim dividend, its first in 19 years.
• Risks remain: Sweet Treats divisional contribution declined 16% amid production disruption and inefficiencies, and management expects input-cost inflation to be higher next year than previously anticipated.

Premier Foods (LON:PFD - Get Free Report) announced its quarterly earnings data on Thursday. The company reported GBX 5.60 EPS for the quarter, Digital Look Earnings reports. The business had revenue of £514.50 million during the quarter. Premier Foods had a return on equity of 9.74% and a net margin of 11.62%.

Here are the key takeaways from Premier Foods' conference call:

• Branded revenue rose 3.2% and trading profit increased 2.4% in the first half; adjusted EPS was up 4%. The company upgraded its adjusted PBT and EPS expectations to the top end of its range, attributing the upgrade to lower-than-expected interest costs.
• Management highlighted growing resilience across the portfolio despite a long, hot summer: Sweet Treats branded revenue grew 6.7%, international revenue rose 8%, and all three acquired brands delivered double-digit growth. The company also reported U.K. market-share gains, while noting that acquisitions are part of its plan to reach consistent mid-single-digit growth over time.
• Sweet Treats divisional contribution fell 16% to £12 million despite strong sales, reflecting heat-related production stoppages and inefficiencies, additional labor to meet demand, and marketing-spend timing. Management expects some production-related pressure to continue in the second half, although it has plans to add capacity and improve efficiency.
• Free cash flow rose nearly 44% year over year, and net debt was more than £70 million lower than a year earlier, leaving leverage at 0.6x. Premier Foods also introduced an interim dividend of 1.12 pence per share, its first in 19 years.
• Management said input-cost inflation is likely to be higher next year than the low-single-digit level assumed at the start of the current year, with the outlook dependent partly on energy and oil prices. Hedges and supplier contracts provide some protection, and the company said it was not yet planning pricing action before its annual review.

Premier Foods Stock Down 1.5%

Premier Foods stock traded down GBX 3.10 during trading hours on Thursday, hitting GBX 196.90. The stock had a trading volume of 99,757,688 shares, compared to its average volume of 11,445,881. The company has a quick ratio of 0.41, a current ratio of 0.75 and a debt-to-equity ratio of 24.06. The stock has a market capitalization of £1.69 billion, a P/E ratio of 12.70, a price-to-earnings-growth ratio of 1.44 and a beta of 0.59. Premier Foods has a 12-month low of GBX 159.90 and a 12-month high of GBX 212.60. The stock's 50-day moving average price is GBX 196.84 and its 200-day moving average price is GBX 195.89.

Wall Street Analyst Weigh In

A number of analysts have recently weighed in on the stock. Shore Capital Group reaffirmed a "house stock" rating on shares of Premier Foods in a research report on Thursday, July 16th. Jefferies Financial Group reaffirmed a "buy" rating and set a GBX 240 price objective on shares of Premier Foods in a research report on Thursday. Finally, Royal Bank Of Canada lowered their price objective on Premier Foods from GBX 230 to GBX 220 and set a "sector perform" rating for the company in a research note on Friday, July 17th. Four equities research analysts have rated the stock with a Buy rating and one has assigned a Hold rating to the company's stock. Based on data from MarketBeat.com, the company presently has a consensus rating of "Moderate Buy" and an average target price of GBX 244.

Premier Foods Company Profile

Premier Foods plc, 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.

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