Maker of Oxo, Mr Kipling, Bisto raises full-year profit outlook as new lockdowns comes into force

Saleha Riaz
·2 min read
The pandemic and lockdown has meant people were eating at home more, which helped boost sales. Photo: Getty Images
The pandemic and lockdown has meant people were eating at home more, which helped boost sales. Photo: Getty Images

Premier Foods (PFD.L) reported strong growth in its results for the first half of 2020 and expects trading profit for the full year to be ahead of current market expectations, as the UK settles into a one-month lockdown.

The manufacturer of popular food products including Mr Kipling cakes, Oxo stock cubes and Bisto gravy said the coronavirus pandemic meant people were eating at home more often, particularly in Q1, and this helped boost sales. It pointed out that its online performance was up a 112% in first half of the fiscal year (H1) as people stayed indoors.

CEO Alex Whitehouse, said the company now expects “to see an increase in demand for our brands due to the impact of recently increased government restrictions on eating out. The longevity of this increased demand is likely to be linked to the duration of these new measures, and although we have tougher comparatives in the fourth quarter, we anticipate that Trading profit for the full year will be ahead of current market expectations.”

H1 group revenue was £421.5m ($557m), up 15% year-on-year. Trading profit increased 28.7% to £65.8m after increased marketing investment and incremental costs related to COVID-19. The company said grocery brands household penetration was up over 3%, attracting 1.1 million new consumers.

Last month, Kantar reported that take-home grocery sales rose by 9.4% during the 12 weeks to 4 October.

It explained that shoppers are moving a greater proportion of their eating and drinking back into the home. This is likely a response to rising COVID-19 infection rates, greater restrictions on opening hours in the hospitality sector, and the end of the government’s Eat Out to Help Out scheme.

Premier's stock performance over the past five days. Chart: Yahoo Finance UK
Premier's stock performance over the past five days. Chart: Yahoo Finance UK

Online sales in the past month were up 76% on a year ago, with one in five households ordering groceries via the internet, it said.

READ MORE: What the new lockdown rules mean for UK businesses

The UK’s second lockdown kicked off on 5 November and will continue until 2 December in an effort to combat rapidly rising coronavirus infection rates.

The lockdown is a last-ditch attempt to get case numbers under control before the festive period.

Food shops, supermarkets, garden centres and certain other retailers providing essential goods and services can remain open. Essential retail should follow COVID-secure guidelines to protect customers, visitors and workers, the government said.

Non-essential retail can remain open for delivery to customers and click-and-collect.

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