Premier Foods is plotting to snap up more brands to bolster surging growth at the ambient supplier as annual profits beat expectations and branded sales reached £1bn.
CEO Alex Whitehouse called the 52 weeks ended 29 March “another strong year” for the group and highlighted further M&A as a central pillar of the growth strategy.
Turnover from Premier’s stable of brands, such as Mr Kipling, Nissin and Ambrosia, increased 5.2% to surpass £1bn for the first time, with group revenues up a more modest 3.5% to £1.2bn following a planned reduction in own label activity.
Trading profits rose 6% to £187.8m, exceeding expectations in the City.
Growth was led by volumes as Premier invested in more promotional activity and price, helping drive market share gains. However, Whitehouse expected growth in the new financial year to be more balanced between value and volumes as Premier looked to pass through input cost inflation.
Stand-out performers in 2024/25 included Nissin noodles, which registered double-digit sales growth, and the premium Ambrosia Deluxe and Mr Kipling Signature Bites ranges as consumers indulged in trading up amid a wider gloomy economic backdrop.
Premier benefitted from extending into new categories, including porridge and ice cream, with sales racing 46% higher, led by the Ambrosia porridge pots.
Acquisitions also contributed to the performance as The Spice Tailor and Fuel10K both racked up double-digit growth and remained “well-set for significant future growth,” according to Whitehouse.
The CEO, who has led a dramatic transformation at Premier since taking the helm in 2019, told journalists at a press conference on Thursday morning that acquiring brands was “very much part of our growth strategy”.
“The progress we’ve made with Fuel10K and The Spice Tailor are good evidence of that,” he said. “We continue to actively look for further [M&A] activities. I can’t go into what categories and where we’re looking but we’re actively out there looking for the right brands.
“What we’re really looking for is brands where we believe that the application of our brand-building capabilities and our branded growth model will deliver long-term value for shareholders. We’re pretty fussy and that is the key thing here, we have a strong filter on what we are looking for. That is one of the reasons Spice Tailor and Fuel10K have worked so well for us.”
City analysts emphasized the importance of more acquisitions to Premier’s strategy.
“Ongoing momentum is building; organic capital expenditure is rising, and optionality is materially growing to us, including the potential for bigger M&A,” said Darren Shirley of Shore Capital.
“M&A targets continue to be assessed and management remains highly selective, but the group has clear firepower to deploy,” added Jefferies analyst Andrew Wade.
Part of the turnaround in fortunes at the group spearheaded by Whitehouse include a focused effort in deleveraging. Net debt fell by a further £92m in 2024/25 to £143.6m.
And Premier stepped up its dividend for shareholders by 62% to 2.8p after moving another step closer last year to resolving long-running issues with the pension scheme.
“As we look ahead to the coming year, we expect revenue growth to be supported by a strong product innovation programme and our expectations for trading profit growth are unchanged,” Whitehouse said.
“In line with our capital allocation framework, we will continue to invest in projects to both increase efficiencies and automation and facilitate growth through product innovation and capacity while we also remain focused on pursuing M&A opportunities where we can add value to brands through the application of our branded growth model.”
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