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September heatwave cools Premier Foods grocery sales

Published 12/10/2016

Mr Kipling cakes group Premier Foods saw grocery sales hit by the warm September weather (Premier Foods/PA)
Mr Kipling cakes group Premier Foods saw grocery sales hit by the warm September weather (Premier Foods/PA)

Oxo and Ambrosia firm Premier Foods has warned over first-half profits after last month's unexpected heatwave dented demand for its gravy and puddings.

The group - which also owns Bisto, Sharwood's and Mr Kipling cakes - revealed that sales in its grocery arm tumbled by 9.5% in its second quarter to October 13.

Premier said gravy and stocks sales were among the worst hit, dropping by 13%, while dessert sales were 9% lower in the quarter.

The group said half-year trading profit was now expected to be slightly lower than a year earlier after the September blow left overall first-half sales down 1.8%.

Full-year sales are now expected to grow by a more muted 1% to 2%, but Premier said a tight rein on costs was set to keep annual profits in line with expectations.

Premier chief executive Gavin Darby said: "We are disappointed that our grocery business reported materially lower sales in the quarter due to warmer weather; particularly in September."

Premier, which fought off takeover attempts earlier this year by Schwartz spice US owner McCormick & Company, said that, while September was the second equal warmest on record, every week in its second quarter was warmer than a year earlier.

But strong demand for new Cadbury cake Amaze Bites and its Cake On The Go range helped drive a 6.4% rise in sales of sweet treats in the second quarter, while Premier's international business also performed well, with a 13% sales lift.

Premier launched Cadbury cake ranges in the United Arab Emirates for the first time towards the end of the quarter.

Martin Deboo, analyst at Jefferies, said: "An unseasonably cold winter could still put things to rights. But September's heatwave was one that Premier Foods and its shareholders could have done without."

Premier shares dropped as much as 14% after it laid bare its September sales woes.

Clive Black, of Shore Capital, said: "For us, September was demonstrably warm - the apparel trade is testimony to that - but hardly frazzle country.

"As such, the magnitude of the weakness of Premier's grocery division in the month takes us by surprise."

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