The owner of Mr Kipling cakes has said a rise in marketing spending on its top brands and improving volume growth in the grocery market will offset the pressures from a supermarket price war and help it meet profit forecasts.
Premier Foods said profit on a proforma basis, as it moves from a calendar fiscal year to an early April year-end, fell six per cent to £131 million on sales down 4.5 per cent. That was in line with expectations with the company adding that trade was improving.
Group sales in its final quarter fell 0.6 per cent with branded sales flat, representing a fourth straight quarter of improvement as advertising and new products helped boost demand.
Under chief executive Gavin Darby, who joined in 2013, the firm has slimmed its operations and reinvested cost savings into increased marketing on a core group of brands such as Mr Kipling and Ambrosia to drive sales.
Progress has been hit though by recession-hardened shoppers' penchant for more own-brand products and discounter stores. That trend has rocked Britain's leading supermarkets, Premier Foods' biggest customers, and sparked a price war.
The group said that discounter growth was now slowing as traditional supermarkets fight back. Steadily rising volume growth in its categories and the wider UK grocery market, and shoppers' improving disposable incomes were also positives for the firm.
"While we expect the trading environment in the coming quarters to be challenging, our expectations for the year are unchanged," Mr Darby said.
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