Premier Foods defends strategy ahead of investor showdown
Boss Gavin Darby is facing calls from an activist investor for investors to vote against his re-election at the group’s AGM.
The under-fire boss of Mr Kipling cakes firm Premier Foods has insisted his strategy is “delivering results” as he prepares for a showdown with investors.
Chief executive Gavin Darby hailed a 1.7% rise in first-quarter sales and growth of 4.5% in the past six months as proof that Premier is on track in the face of calls for his scalp from an activist investor.
Oasis Management is asking investors to vote against Mr Darby’s re-election at Premier’s annual general meeting on Wednesday, claiming he has presided over five years of value destruction.
Oasis has upped its stake in Premier, while US hedge fund Paulson & Co has also piled on the pressure by increasing its stake from 1.99% to 6.08%.
But Mr Darby – who has headed Premier since 2013 – defended the group’s strategy in its latest trading update, while the group insisted it was continuing to “identify other strategic opportunities to accelerate the company’s turnaround to create value for shareholders”.
It is also slashing costs by £25 million a year.
Our strategy of product innovation and working closely with our strategic partnerships is delivering results Gavin Darby, Premier Foods
Mr Darby said: “Over the last six months, we have delivered sales growth of 4.5%, which goes to show that our strategy of product innovation and working closely with our strategic partnerships is delivering results.”
Its update showed the first-quarter performance was boosted by a 14% surge in UK sales of Mr Kipling cakes thanks to a recent advertising push, brand re-design and new packaging.
Branded products saw sales rise 1.1% in the quarter, but non-branded sales jumped 4.8%.
Mr Darby and chairman Keith Hamill reportedly said late on Tuesday that the group was willing to sell some brands at the right price.
The group’s management have come under heavy criticism from investors after fending off a takeover tilt from US firm McCormick in 2016, while also recently opting not to sell off its fast-growing Batchelors brand.
Instead of tying up with McCormick in 2016, Premier announced a collaboration agreement with Japan’s Nissin, which also took a non-executive position on Premier’s board.
Nissin also became the firm’s largest shareholder with 23%, but it backs Mr Darby.
Those coming out to bat for Mr Darby include shareholder advisory groups ISS, PIRC and Glass Lewis, as well as industry heavyweights Lord MacLaurin and Lord Price – the former chairman of Tesco and ex-managing director of Waitrose respectively.