Premier Foods issues ‘short and sweet’ trading statement
Shore Capital analysts Clive Black and Darren Shirley said the statement covering the fourth quarter and full year 2012 trading “gives a clear indication … of the progress that [senior management] have made in stabilising this business through a combination of better control, improved commercial relations and selective de-leveraging that allows management to better focus on operations”.
‘A solid performance’
The trading statement confirmed that fourth quarter trading for 2012 was in line with its expectations.
The statement also reported “a solid performance” during the quarter and continuing the growth momentum behind its Power Brands in the first three quarters of the year.
Premier Foods ceo Michael Clarke said: “While the market continues to be challenging, I'm encouraged by the progress we have made in 2012. This provides a solid platform to continue our growth momentum in 2013.”
Shore Capital estimated the firm’s 2012 current pre tax profit at £32M, taking into account cash exceptional items. Earnings per share were estimated at 10.1p.
Pension responsibilities
For 2013, the analysts predicted current pre tax profit of £58M and earnings per share of 18.3p, as the manufacturer continued to face considerable remaining debt and pension responsibilities.
Shore Capital retained its ‘Hold’ advice on Premier Foods' stock.
Meanwhile, Investec Securities analyst Martin Deboo noted that the firm’s "surprise" fourth quarter update indicated that trading during this critical period had been in line with management expectations.
Deboo estimated that the manufacturer makes about 40% of its profits during the fourth quarter.
“Given Premier Foods’ heritage as serial disappointers on trading, we view this as reassuring, but note that plenty of challenges remain,” said Deboo.
The concern is that is that financial year profits for 2012 will be “more or less flat”, despite the “soft” comparable performance during financial year 2011 and the delivery of cost savings ahead of expectations.
Premier Foods will report its preliminary results on February 21.
