Cost of living: Mr Kipling owner benefits from trend to eat at home but fresh price hikes on way
The group’s revenues rose by 6.2 per cent in the half year to October 1 to £419 million, from £394m a year ago. Adjusted pre-tax profits swelled by more than a tenth, from £42m last year to £47m this year. The food firm said it had managed to cushion the impact of cost inflation, which has pushed up food and drinks prices significantly, by making cost savings and increasing its prices. An annual price increase will be made in the fourth quarter of the year, which the group expects to further make up for inflated costs.
Chief executive Alex Whitehouse said that raising prices is a “last resort” for the business, telling investors: “The last thing we ever want to do is increase pricing - that is our last resort. So we work really hard to try and minimise that. With the current levels of inflation, you can’t get away from price increases altogether. We do an enormous amount of work with our procurement team, we enter into long-term contracts, we hedge things wherever we can - it is increasingly difficult at the moment. And we have a series of cost-saving initiatives, including automation in the factories. Those savings are used to offset cost inflation, and what we are left with, goes into price increases.”
People are finding that the “best restaurant in town is at home”, Whitehouse added, meaning that its brands have benefited from the shift to affordable meals as consumer budgets are more squeezed. The company is set to launch a campaign encouraging people to cook and prepare affordable meals at home for just £1 a serving.
Whitehouse added: “The current economic climate is undoubtedly challenging for consumers, and our broad range of affordable brands have always played a key role for families when times are tough. With people starting to eat out less, they often find the best restaurant in town is at home, where you can make nutritious and tasty meals more affordably.”
The group is on track to deliver on its full-year expectations. It also noted that its cooking sauces like Loyd Grossman and Sharwood’s have performed particularly well this year.
Mark Crouch, analyst at social investing network eToro, said: “Amid the release of eye-watering fresh UK inflation data, major food supplier Premier Foods has published its half-year results, with a positive update for the market. The firm is confident it could take a bite out of high street businesses as households eschew dining out for dining in this winter. The firm has posted a strong set of numbers. But like with many other firms in the food and groceries market, it has been successful in passing on cost increases to customers and remains confident its next set of increases - due in Q4 this year - will be passed on without issue.”
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