Quarter 1 Trading Update

Alex Whitehouse, Chief Executive Officer

"We grew branded sales by another 1.2% this quarter, led by very strong volume led growth in branded Sweet Treats. This was driven by the strength of our innovation programme with new product ranges such as Mr Kipling birthday cake tarts performing very strongly, as we brought to Britain a trend that is particularly popular in the US."

"We also continued to grow volume and value market share overall, despite the impact of recent warmer weather on some Grocery categories. Ambrosia porridge and Cape Herb & Spice were key drivers of further good progress in New categories, with sales up 38%, while The Spice Tailor and FUEL10K also continued to perform very well."

"We expect branded revenue growth to build through the year, as we launch further new products, such as FUEL10K yogurt and granola pots. Our Trading profit expectations for the full year are unchanged, underpinned by our proven branded growth model and ongoing cost efficiency programmes."

Trading update

Grocery

Grocery revenue of £174.7m was down (2.7%) compared to the same quarter a year ago. Branded sales were lower than last year reflecting strong volume growth in the comparative period, while categories such as gravy, stock and soup were impacted by higher than average temperatures during the quarter. Sales of The Spice Tailor and FUEL10K both grew strongly, supported by further new product development such as East Asian cooking sauce kits and protein enriched Noodles. New categories revenue increased by 38% in the quarter; Ambrosia Porridge pots yet again significantly increased sales and market share, leveraging further distribution gains and Cape Herb & Spice also delivered strong sales growth. Non-branded Grocery revenue declined (8.8%) due to consumers switching to brands in certain categories, and the decision to exit some lower margin contracts.

The second half of the year will see an acceleration in new product development launches. The Spice Tailor is extending into another cuisine with the introduction of Mexican kits, FUEL10K enters the chilled aisle with high protein yogurt and granola pots and Bisto brings Peri-Peri gravy to market, to attract more younger consumers.

Sweet Treats

Sweet Treats branded sales grew strongly in the quarter, up 11.4% on last year, substantially due to the quality of its innovation programme. For example, the indulgent Mr Kipling Signature Brownie Bites contributed strongly to growth, as did Birthday cake tarts, attracting new consumers into the category, while the recently launched healthier 'Lunchbox slices' also contributed to growth. Meanwhile, Cadbury cake benefitted significantly from the launch of new Caramel Mini Rolls. In overall terms, the cake category grew in the period, and Mr Kipling and Cadbury cake both delivered volume and value market share gains in this growing category. Towards the end of the quarter, the Group also launched new Mr Kipling 'Breakfast Bakes' which contain fibre and 30% less sugar. Non-branded sales declined by (5.6)% largely due to contract exits on Swiss Rolls, Whirls and Slices.

International

Overseas revenues grew by 5%4 at constant currency compared to last year. In Australasia, cake and cooking sauces both delivered good sales growth, which was reflected in market share gains in both categories.

Outlook

The Group expects branded revenue growth to build through this financial year, as strong comparatives ease and further new product development comes to market. Expectations for Trading profit this year are unchanged, underpinned by delivery of the Group's branded growth model and its ongoing cost efficiency programmes. In the medium-term, the Group expects to continue to deliver strong progress against all five pillars of its growth strategy.

As one of Britain's largest food producers, we're passionate about food and believe each and every day we have the opportunity to enrich life for everyone. Premier Foods employs over 4,000 people operating from 13 sites across the country, supplying a range of retail, wholesale, foodservice and other customers with our iconic brands which feature in millions of homes every day.

Grocery