Premier Foods sees profit at top end of market estimates from virus stockpiling

Michelle K. Wallace

(Reuters) – Mr Kipling cakes maker Premier Foods (PFD.L) said on Monday it expects annual trading profit to be at the top end of market expectations as the coronavirus pandemic fuelled a short-term peak in volumes in March, sending its shares up almost 30%.

The company said volumes have started to reduce from the exceptional levels seen in March, but they are still expected to continue to be higher than the average patterns of demand.

Group sales in the fourth-quarter are expected to have grown about 3.6% compared with last year and about 10.5% in March, the Bisto gravy and OXO cube maker said.

“This reflects more meals being eaten at home than usual due to recent measures set out by HM Government and hence increased demand for the Group’s product ranges,” the company said.

Shares in the company were up 28.3% at 42.59 pence by 0709 GMT.

Premier Foods also said it agreed to a segregated merger of its pensions schemes that will help save 4 million pounds ($4.98 million) annually from fiscal year 2020, adding that it is moving closer to a scheme buyout by a specialist insurer.

“This announcement results in higher forecasts, lower cash injections and makes Premier considerably more investable,” Peel Hunt analysts said, adding that the company will now be in a position to pay dividends.

The net present value of pension deficit contributions could reduce from current 300 million pounds to 320 million pounds by about 45% to 175 million pounds to 185 million pounds, the company said.

($1 = 0.8030 pounds)

Reporting by Tanishaa Nadkar in Bengaluru; Editing by Sriraj Kalluvila and Uttaresh.V

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