Premier Foods, the maker of Mr Kipling cakes and Oxo cubes, increased sales more than expected in the past three months as households returned to home cooking in the face of a squeeze on the cost of living.
The London-listed foods group said sales of branded groceries such as Batchelors sauces and Nissin noodles were especially strong, helping to push up overall sales by 6 per cent from the previous year to £197mn in the three months to July 2.
Premier sells Nissin products in the UK on behalf of the Japanese company, which is also its largest shareholder.
The growth was driven by price rises as the company seeks to recoup cost inflation. Sales volumes were close to those recorded a year earlier, when strict Covid-19 restrictions elevated Premier’s sales by forcing households to spend long periods at home.
Premier said: “Good value meal solutions [are] proving increasingly popular as household budgets become ever stretched.”
Clive Black, analyst at Shore Capital, said: “Post ‘deep pandemic’ many people continue to work from home, as they do in extreme heatwaves, whilst in-home prepared meals, particularly by families, are more relevant as essentials inflation bites many households.”
Younger and single households may particularly have turned to convenience products such as Batchelors, Nissin and Sharwood’s sauces for “affordable refuelling”, Black added.
The first-quarter sales rise marked the latest stage of a recovery for Premier, which had struggled with high debt and pressure from activist investors. A merger of its three pension schemes in 2020 was a key stage in a revamp under chief executive Alex Whitehouse, who was promoted to the role from UK managing director in 2019.
Like other food manufacturers, Premier is dealing with steep rises in the costs of its ingredients and labour, but it said it had been able to feed these through into consumer prices, along with making some “cost efficiencies”.
Whitehouse said the group was “firmly on track” to meet full-year expectations.
“We detect a notably more confident tone, underpinned by good progress on input cost recovery,” said Martin Deboo, analyst at Jefferies.
Consumers also turned to the company’s Mr Kipling and Cadbury cakes, pushing up sales in its “sweet treats” division by 5.1 per cent. Shares in the company were flat in early trading.