Broker snap: Premier Foods reports 'very strong' H1, says Investec

23rd Jul 2013 10:24

Investec has reiterated its 'buy' rating for branded food producer and ingredients firm Premier Foods after the company reported 'very strong' first-half results on Tuesday.The company, famous for its Ambrosia, Hovis and Sharwood's brands, said that trading profit for 2013 will now be at the upper end of consensus predictions, which equates to over £140m, according to Investec analyst Martin Deboo. His previous forecast was for £135m.Meanwhile, full-year cash flow is being guided to £50-70m, ahead of the broker's £49m estimate.The broker's 95p target price has been placed 'under review'.Deboo said that the closely-watched trading profit number was 50% ahead (+£15.8m) of last year, driven mainly by cost savings, "which benefitted from both rollover of the £48m of gross savings secured in FY12 and early realisation of targeted FY13 savings of £20m".While the analyst said this was a "great result" for Premier, he said: "Our offsetting concern is around growth, which decelerated in Q2 outside the Power Brands and where H1 profits benefitted from a reduction in marketing investment."Deboo said that Premier Foods would need to management their overall growth profile "carefully"."However, viewed in the round, we are happy to remain 'buyers' this morning."The stock was up 8.82% at 92.5p by 10:53.