Premier Foods plc

Good day and thank you for standing by. Welcome to the Premier Foods Q3 Trading Update conference call. At this time, all participants are on the listen and on the note. After the presentation, there will be a question and answer session. To ask a question during the session, you will need to press star and one on your telephone. I must advise you that this conference is being recorded today, Thursday, the 20th of January 2022. I would now like to hand the conference over to your speaker today, Alex Whitehouse. Please go ahead.

Thank you very much and good morning, everyone. Thank you for joining this, which is our quarter three trading update call, and it covers the 13 weeks to the 1st of January 2022. I'm also joined this morning on the call by Duncan Leggett, our Chief Financial Officer. So I'll give a quick overview of our third quarter trading and then I'll hand over to Duncan to talk about our financial outlook that we've provided this morning. And then, of course, we'll open the call to questions. So today's headlines are that we've had a really strong Q3. So it was ahead of our expectations and also ahead of the guidance that we've issued. And we've also outperformed in all of our categories, leading to a significant increase in market share. And now with three strong quarters delivered and good momentum continuing into the final quarter, we're today increasing our profit guidance for the full year. We now move on to look at some of the key figures that make up this morning's statement. So Q3 group sales increased by 7% compared to two years ago. And so that brings year-to-date group sales to 7.3% ahead on the same basis. That strong momentum that we have in the first half of the year flowing through into quarter three. Now, you'll recall that this year we're measuring ourselves against two years ago as well as one year ago, and that's given the exceptional elevated consumer demand that we saw last year when out-of-home eating was restricted. So we're essentially looking to be making two years' progress versus two years ago. And we provided both comparison bases in the RNS this morning, just as we did in quarter one and quarter two. On the one-year basis, group sales were 1.8% lower when compared to that inflated year-ago base, and that was, in fact, ahead of some of the expectations that we know were out there, which were around minus 3%. Now, once again, the key driver of the performance has been our brand. Our brands grew by 11.3% versus two years ago. So that's the equivalent of two years of five and a half percent growth back to back. And it was broad based across the brands with grocery growing at 11.2% and sweet treats at 11.6%. So very similar growth rates on both parts of the business there. And, of course, that great brand performance continues to be driven by our branded growth strategy. So leveraging our great market-leading brands and bringing highly relevant new products to market, which are based on our in-depth understanding of consumer needs and trends. We also continue to support our major brands with engaging and meaningful advertising and marketing campaigns, and then strive to deliver excellent in-store execution through our strong retail partnerships. And whilst those strong retail partnerships and that great execution is always important, it's obviously especially so in quarter three and the run-up to Christmas, because that quarter, of course, is our key quarter in terms of sales. Yes, again, we've invested behind many of the brands in the quarter. So we have Bisto, OXO, Mr Kipling, Bachelors and Ambrosia, all benefiting from TV advertising in the run up to Christmas. And during the quarter, we also brought to market several new products, a number of which were based on the ongoing consumer trends for healthier eating and plant based products. And these include ranges such as the Bachelors meat free pots and a new low salt version of Paxo stuffing. In addition, we also made our first step into biscuits with the Mr. Kipling Signature Range biscuit launch and introduced a range of ice creams under Mr. Kipling and Ambrosia brands. And when you take all this together, it means that we again outperformed all of our five main categories. 3.5% ahead of the market overall and we increased our market shares in each one and collectively that's a 90 basis points increase in market share. And we see this as a significant outperformance that reflects the strength of our brands, our proven brand growth model and the strength and depth of those customer relationships. Now, I've also previously said that we've worked hard refining our e-commerce proposition to ensure that our products are well marketed on the retail online platforms. So I'm very pleased to say that this continues to deliver for us as we again outperformed the online channel. We gained 240 basis points of market share online in the quarter. And again, these gains were across all our categories. Our online growth was, in fact, over 90% compared to two years ago, and the online channel in our categories was up 75%. If we look into some of the detail behind the brands that have driven what was such a good quarter for us, firstly, Bisto, our leading grocery brand, saw sales growth of around 11% versus two years ago. And that was helped by some really great execution in store in the run-up to Christmas, but also by consumers trading up to our premium range, which is Bisto Best. And that's very much in line with our growth strategy for the brand. Charlotte's cooking sources and accompaniments also had an excellent quarter, both in the UK and overseas. And that was driven by increases in distribution. And also the Charlotte's 30% less fat range continues to perform very well. And we also recently launched vegan variants of our two best selling flavors of Indian cooking sources. And as you'll be aware, over the last few years, we've been expanding our range of healthier products, and it's a very important part of our innovation and growth strategy, as well as our new ESG strategy, which you might recall that we launched in October last year. And the new ESG strategy includes plans to double sales of products that meet high nutritional standards and triple sales of plant-based products by 2030. Now, the fastest growth rate, once again, was Nissin's Sober Uncut Noodles. They've continued on their very strong trajectory. And as we've said before, these products deliver incredibly well on authentic product quality. And it's this which drives a strong repeat purchase, which then translates into exceptional sales growth. So compared to last year, sales were up by 62%, and against two years ago, by over 150%. And Bachelors also performed very well in the quarter with copper soups and pot snack ranges in particular driving the growth. So, in fact, overall, in that quick meals and snacks category, we gained a very healthy 380 basis points of market share between the Bachelors and the Nissin brands compared to two years ago. Moving on to our sweet treats business, here we increased our branded sales by 11.6% compared to 2019 and also by 6.3% compared to last year. And in fact, Mr. Kipling enjoyed its best ever Christmas with growth in the UK of 16% compared to two years ago and 7.5% compared to last year. And the brand's really continued to perform really well following its relaunch a few years ago. And it's on track actually this year for another record year of sales. Cadbury Cake also delivered double-digit sales versus two years ago with both the core ranges like mini rolls, but also some of the new products like fudge and crunchy cake bars contributing strongly to growth there. In the fourth quarter, we also see the expansion of the cake bar range, building on the success of that fudge and crunchy cake bar launch with the launch of Oreo cake bars, another very well-known Cadbury brand product. In non-branded, you'll remember that we've made some conscious decisions to discontinue some low-margin contracts, particularly in sweet treats, and focus on growing our brands. And in grocery, some of our food service business has yet to fully recover versus two years ago, although I should say that Charnwood Foods, which was our frozen pizza-based business, did actually deliver sales growth compared to last year. But overall, sales of non-branded products were 6.4% lower in the quarter compared to last year and 8.9% lower versus two years ago, again, as we focus strongly on our brands. Moving into the international business, I'm very pleased to say that we continue to make good progress and Q3 sales increased by 33% versus two years ago. Sales in all of our focus markets, Ireland, Australia, US and Europe, all saw growth compared to two years ago and sales were a little lower than last year in Ireland and that's due to lapping the pandemic related elevated volumes so very similar dynamics there to the UK but also in Ireland the impact of some stock building that took place to protect service in advance of the new EU exit And you remember in Ireland that we're also continuing to apply that proven branded growth model from the UK. So we've got further new products that went into market in Ireland and we also advertised Mr Kipling and Bisto again on TV in Ireland. So that's the second year now in succession as we again work towards implementing the full UK branded growth model in Ireland. And in Australia, Mr. Kipling increased its market share and grew ahead of the cake category in the quarter. So all in all, a really positive quarter, I think, for our international business. Lots of good progress. And as we go into quarter four, we'll now see the start of the Mr. Kipling test in the United States. And this, of course, coming on the back of that successful test that we had in Canada. So I'm now going to hand you over to our CFO, Duncan, who's going to summarize a few points on our guidance from this morning's announcements.

Thanks, Alex, and good morning, everyone. So as we enter the final quarter of the year, with the benefit of three strong quarters of trading behind us, including, as you know, the all-important Q3, we're now in a position to upgrade our profit expectations for the year. So what does that mean? So we're saying adjusted profit for tax is expected to be at least $125 million, and that's driven by improved outlook for trading profit, which we expect to be at least $145 million. Now, as a reminder, we reported just over 115 million for adjusted PVT last year. And this actually was a decent step up from 93 million the year before. So we're looking at least a 34% increase compared to two years ago. And then just for reference, we're seeing consensus for adjusted PVT of around 119 million coming into today. There's a fairly narrow range of a million or so either side. So in terms of sales, within consensus, around the 900 million mark for the full year. We aren't expecting an update to our sales guidance today. We've always known, and I guess just as a reminder, the end of this quarter four, would you believe it, marks the two-year anniversary of the elevated consumer buying volumes just before we entered lockdown restrictions at the start of the pandemic. And additionally, you'll have seen our leverage levels become much more normal over the last 18 months, And our deleveraging is expected to continue this year as the net debt EBITDA ratio progresses towards a one and a half times medium term target. So with that overview, in terms of how we see the rest of the financial year, I'll hand you back to Alex.