Stock prices on the FTSE 250 are (broadly speaking) still struggling for traction on Wednesday. The UK’s second-tier share index was recently 0.5% lower on the day as concerns over runaway inflation roll on. However, the Premier Foods (LSE: PFD) share price isn’t having any problems gaining traction.
Prices of the food manufacturer have soared to 108.28p per share at one point in midweek business. This was the most expensive level for four months. It’s since settled back, but at 106.2p, the Premier Foods share price remains 4% higher from Tuesday’s close.
Premier Foods has soared after announcing it’ll be paying its first dividend for 13 years.
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Profits soar at Premier Foods
In bubbly full-year results, the food producer — which makes everything from Mr Kipling cakes and Ambrosia custard to Sharwoods Indian cooking sauces — said that group revenues soared 10.3% in the 53 weeks to 3 April, to £947m. Sales of its branded products, meanwhile, grew by an impressive 13.6%.
Premier Foods said it gained more customers during the last financial year “as a result of more people cooking from home, experimenting with new recipes and expanding their repertoire of meals.” It said too, demand for its edible goods continued to grow ahead of the broader market. The company’s market share rose by 70 basis points year-on-year.
Premier Foods said it enjoyed “a prolonged period of elevated demand for its product ranges” as Covid-19 lockdowns forced people to eat all of their meals from home. It managed to keep product availability high due to the “robustness” of its supply chain, it noted. And a combination of brand investment and new product launches allowed it to gain market share in the period, it added.
Dividends return
Soaring sales at Premier Foods saw adjusted pre-tax profit increase 23.5% year-on-year, to £117.9m. Meanwhile, net debt at the business dropped to £332.7m, from £429.6m in financial 2020. And the company’s net debt to EBITDA ratio plummeted to 1.9, from 2.7 previously, the lowest level on record.
Premier Foods says that it has “made significant progress in delivering against its branded growth model strategy in recent years,” a drive which has pushed net debt to levels that would dividend payments to resume. Consequently the UK food share said it will pay a 1p per share dividend for fiscal 2021. This is the first shareholder payout since 2008.
A bright outlook
Looking ahead, Premier Foods said it has entered the new financial year “in a strong position.” The FTSE 250 firm paid tribute to its larger consumer base, upcoming new product launches, and television advertising among some of its largest brands in the coming months, as reasons to be optimistic.
Premier Foods has begun fiscal 2022 in line with expectations, it said. And it added that “[we] will look to expand through accessing new categories in the UK and also in selected overseas markets, while exploring bolt-on acquisition opportunities.”
