First quarter sales drop at Premier Foods

27th Apr 2011 08:20

While Premier Foods managed to up its prices to cover inflation in the first quarter, the Hovis bread and Branston pickle maker saw sales fall by 3.1%.However, the company did stress that the rate of decline slowed towards the end of the period, and expects that "a better performance in March is more representative of the year ahead than the weaker trading in January and February."Additionally, the group warned that first half gross profit will reflect the timing gap between cost increases and the pricing coming into effect in March and April. Therefore, profit delivery will be more weighted to the second half." We have also made good progress on pricing. Our priority has been to obtain price rises to recover raw material inflation. I am pleased to report that we have achieved the price rises we sought with all customers and these cover most of the raw materials inflation. However, inflation remains an issue and we will continue to seek price rises to cover this," said chief executive Robert Schofield.Group sales dropped by 3.1% to £474m in the three months ended 31 March, while volumes fell by 3.8%. Even though proving disappointing, with shares taking a hit in early trading, the figures were not as bad as some may have feared, with Credit Suisse estimating last week that sales would be off by 5%.The group said that its core brands - excluding Cadbury Cakes - saw volumes and value fall as a result of lower promotional spend compared to last year. Sales fell 11.9%.Non-branded sales increased by 1.6%, but Hovis' non-branded bakery sales declined by 16.5% reflecting a fall in the market and contract losses, the group said.---bc