London / UK. (pf) Premier Foods PLC announces its Full Year results for 2011 and further details of its growth strategies. Key elements of the 2011 results, re-financing package and growth strategies are headlined below:
2011 Full Year results
- Sales for Ongoing business declined by 3,4 percent reflecting challenging consumer environment and the effect of previous customer disputes
- Trading profit for Ongoing business of 173,7 million GBP
- Significant one-off items which offset each other are Trading profit neutral for the year
- Goodwill and intangible asset impairment in Bread division of 282,0 million GBP resulted in a loss after tax from Continuing operations of 230,0 million GBP for the year
- Sales of Meat-free, Canned grocery and Brookes Avana realised total net proceeds of 394 million GBP for a combined Ebitda multiple of 8,7 times
- Net debt of 995,1 million GBP at 31 December 2011
Re-financing package
- Banking facilities of total of 1,4 billion GBP extended to June 2016
- Banking covenants re-set to support strategic plan
- Interest rate swaps converted to additional bank term loan
- Pension schemes to defer deficit contributions until January 2014
- Amortisation payment schedule amended and next payments deferred to mid 2014
- Sliding scale of new deferred bank fees at market rates from 2014
Growth strategies
- Growth strategies aligned around «Best in British Food» vision
- Marketing investment behind eight Power Brands will double in 2012 with sustainable increase planned in subsequent years
- Focus on building collaborative relationships with key customers to drive mutual growth
- Targeting gross four percent year on year supply chain savings and doubling of overhead savings to more than 40 million GBP by 2013
- Long-term approach to deliver sustainable shareholder value
Outlook
The recently announced re-financing package provides the foundation on which the Group´s growth strategies can be implemented. During the coming year, the Group´s priorities remain to stabilise its operational performance, while enabling the business to increase its focus through selected disposals. The consumer environment is expected to remain challenging with continued high levels of promotional activity and ongoing cost inflation, albeit at lower levels than 2011. The Group, nevertheless, believes the planned increase in marketing investment, proposed cost reduction programmes, better customer collaboration and renewed focus across the Group will provide the platform to deliver future branded growth. Consequently, over the medium-term, the Group expects a return to sales growth, and higher gross margins. This will be supported by further sustained increases in marketing investment and a continuation of cost reduction and efficiency programmes. Additionally, the Group will reduce interest charges and net debt.
Chief Executive´s comment
Commenting on the re-financing package, Chief Executive Officer Michael Clarke said: «I am delighted that we have been able to reach a positive outcome with our banking and pension scheme partners. The consent for this re-financing package represents a strong sign of confidence and support for the business, its strategies and growth plans. This is great news for our employees and all of our stakeholders. We intend to draw a line under the performance of 2011. Having put the financing and strategic building blocks in place, our immediate priorities are to implement this re-financing package, continue stabilising the business, re-focus the portfolio and invest in our future growth. Whilst we recognise that the consumer environment remains challenging, our performance thus far in 2012 is in line with our expectations. I am convinced we have the right team to turn this business around and I am very positive about our future».
Bread division
| 2011 | 2010 | Change | |
| Branded bakery sales | 372,0 million GBP | 375,6 million GBP | -01,0% |
| Non-branded bakery sales | 128,5 million GBP | 139,6 million GBP | -08,0% |
| Total bakery sales | 500,5 million GBP | 515,2 million GBP | -02,9% |
| Milling sales | 210,8 million GBP | 172,4 million GBP | +22,3% |
| Total sales | 711,3 million GBP | 687,6 million GBP | -03,4% |
| Gross profit | 208,0 million GBP | 239,9 million GBP | -13,3% |
| Trading profit | 003,4 million GBP | 035,3 million GBP | -90,4% |
Reported Trading profit of the Bread division in 2010 of 38,8 million GBP has been re-stated to 35,3 million GBP to reflect the reallocation of costs previously absorbed by the discontinued Brookes Avana business. Additionally, in 2010, other group and central costs have been allocated to the Bread division to more closely reflect support function activity. The net effect of these items has been to reduce reported Trading profit by 9,8 million GBP.
Total sales for the Bread division increased 3,4 percent in 2011 to 711,3 million GBP, while Trading profit declined from 35,3 million GBP in 2010 to 3,4 million GBP. Sales in the group´s Bakery operations were down 2,9 percent in the year while Milling sales increased by 22,3 percent, largely due to higher pricing compared to the previous year to cover higher raw material costs.
The performance of the Bakery business reflected challenging market conditions, with category volumes down 3,3 percent during the year. High levels of promotional activity remained a key feature of the market and as a result, Trading profit was lower in the year. Hovis branded market share was broadly flat during the year, while non-branded volumes were lower, partly as a result of a contract loss.
Info: The complete statement «Premier Foods announces 2011 Full Year results, details of re-financing package and further information on growth strategies» (PDF; 51 pages; 1’192 KB) is available on the company´s web server.
