Promotions hit sales at Bisto firm

HovisMr Kipling and Bisto parent Premier Foods revealed a hit to sales after the hot summer weather saw demand wane for its cooking sauces and soups.

The St Albans-based business said sales growth of its frontline brands halved to 2% in the three months to the end of September from 4% in the first half after the heatwave put households off its Batchelors soups and Sharwood's sauces.
Bread sales were also 1.5% lower after the hot weather, while group underlying sales overall sank 3.2% as its brands suffered generally amid a "highly competitive" market.

Gavin Darby, chief executive of Premier, said: " The intensity of promotional activity in our markets remains high while our categories were significantly impacted by the hotter weather in July and early August."

Shares in the group tumbled 12% as the update came as a disappointment following a better-than-expected set of interim results in July, which saw Premier raise its guidance for the full year, saying profits at a trading level should be around the top of City expectations.

Premier's assurances that it remained on track with the recently increased guidance failed to ease investor nerves.

Analysts at Panmure Gordon said the performance of Premier's so-called support brands, such as Homepride and Angel Delight, were "particularly disappointing" as sales dived by 9.8% - twice the level of decline seen in the first half.

Premier plans to turn around the fortunes of these brands next year, with increased investment and by targeting sales through discount retailers on the high street.

The group has been undergoing a major overhaul to reduce debts and overhaul its bread business.

It is restructuring the operation, including through the loss of around 900 jobs by closing bakery sites, with the Greenford site shutting in the third quarter.

Premier also called time on production at its 109-year-old flour mill at Barry Docks in South Wales earlier this month as part of a shake-up of its Rank Hovis milling business.

Not all of its brands were hit by the summer heatwave, with its Ambrosia custards and puddings growing market share, thanks in part to a "back to school" promotional push.

Premier has also agreed a 10-year deal to distribute its Ambrosia rice pudding pots in China - a move that could be extended to its other key brands, according to the group.
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