Premier Foods plc

Good morning, everybody. Thanks for joining this, which is our quarter one training update call, and that covers the 13 weeks to the 2nd of July this year. I'm also joined on the call this morning, as usual, by Duncan Leggett, our CFO. I'll start by giving a few headlines of our training in the quarter, and then we'll dive into a few of the key details, which will provide a bit more colour, as usual, before we pass on to questions. Also, while everybody's on, as a reminder, we've got today our ADM, which is at 11 o'clock this morning, which we're hosting at our office here in St Albans, and also with an option of attending virtually. So if any shareholders would like to attend that and don't have the details, then by all means, please contact Richard Gordon in IR for details of how to attend that. Come on with the quarter one results then. So overall, I'm very pleased to say that we've had a strong start And that strong start means that we are firmly on track to deliver on our full year expectations. Looking at some of the other headlines, we've also continued to gain market share. That's building on the share gains that we made last year. And our international business has grown a double digit for another quarter. So if we go for a brief review of progress in the quarter then, importantly our brand of growth model continues to deliver really well for us and you can see this playing out by the fact that our brand of sales grew by 4.2% in the quarter and with the grocery brands up by 4.5% and sweet treats up by 3.3%. So again, a very good result. And as a reminder of our brand of growth strategy, I make no apology for reiterating this for those of you who heard it many times before because it is a the last few years. And that is we start with a portfolio of brands which are obviously leaders in their categories. They've got very high household penetration and obviously very well-known brands to our consumers. And then we listen very carefully. We listen very carefully to our consumers to make sure we've got an in-depth understanding of how they're cooking and how they're eating and how that's changing so that we can bring to market insightful new products which are based on those columns and changing consumer needs and trends. And then we support the brands with emotionally engaging and meaningful marketing and TV campaigns. And then finally, and really importantly actually, we work closely with our key retail partners to make sure that we're delivering excellent internal execution for the brands. So if we look at some great examples of this branded growth model and the activity in the quarter, so in April, we launched the category first, and that was the Mr. Kippering Deliciously Good Cake. And this healthier range, which was a good three years in the making, actually, and it's quite a technical breakthrough, is an entirely designated as non-HFFS, so that's not high fat, molten sugar. It's got 30% less sugar. that our core range is considerably less fat. It's got 10 times the amount of fiber and it's made with real fruit. The product tastes really great and so far they've been received well by our consumers and we've always delivered over a million pounds of sales since we launched it. On the next slide, East Asian cooking sauces and they include flavours such as Thai red curry, Japanese teriyaki and Thai jungle curry and these really help consumers to enjoy an authentic delicious dish at home with the convenience of having the sauce ready-baked for them and obviously at a fraction of the cost of eating out. You might also remember we recently introduced Ambrosia Porridge Puffs It's a convenient, ready-to-eat range of breakfast porridge in three flavours. And neither of us say they're ready-to-eat. They're not a dry product. They're made with creamy West Country milk, which is what you'd expect from a gravy, of course. And this is because when we were working with consumers recently on this development, we discovered that a ready-to-eat product of this nature delivered a much better tasting product that consumers much preferred to the dried options that were already available in the market. And of course, it's performing really well. It's now available to a number of leading retailers. And I think, to me, this is a really good example of us leveraging those strong brand equities to generate incremental revenues by expanding into wide space categories. And of course, breakfast for us is a new meal occasion as well. If you look at all the rest of our brands, they're really targeted on other times of the day. Another important element of the brandless growth model is investing behind our brands, including in advertising. And in the first quarter, we advertised Mr. Kipling, and that's our largest brand, of course, on TV with a new advert, which we called Piano. And this captures a nostalgic moment between a father and daughter that's been moving out. For me, this is a really good example of what I mean by emotionally engaged, emotionally engaged approach that we employ to build this emotional connection between our brands and our consumers. And again, this year we plan to advertise six of our major brands on TV and also supported digitally to increase our overall brand assessment compared to last year. A key benchmark for us is how we're performing against others in our markets of course. I'm pleased to say that we've, as we've done in recent years, we've continued to increase our market share and this is the case both in stores and also online. And then of course the topic of much debate has been the widespread inflationary environment and as we indicated back in May we're seeing another wave of input cost inflation coming through the system Now, as always, we've looked to offset this inflation by using a range of measures, and that includes our hedging strategy, includes our efficiency programmes, and then it also includes pricing. I'm really pleased to say that we've made good progress here, and we've recovered, at this point, all the inflation that we've seen to date, so this course has been a good provision in terms of thinking about the rest of the year. We will, of course, continue to monitor the situation very closely, and if we need to take further action, of course, we'll do so. So the recovery of these increased costs through pricing is largely only taking effect now. So these impacts to our top line are likely to come through in subsequent quarters. But to be clear though, we do have price benefit in the numbers reported today, but that's the effect of the price increases we put through in the latter part of 2021. So in summary, there's some pricing at the end of the quarter. Now, shipping out price and volume this quarter is a rather complicated picture with quite a few moving parts. Yes, overall pricing is playing a big role as the overall sales growth is 6%, which we supported this morning. And, of course, we always expected to see some softer volumes in the course, didn't we, as we're lacking a cross-comparative from last year's Q1, when, if you remember, eating out of home was still restricted, and so we were benefiting around the Then going in the opposite direction, we've got the branded growth model, which drives holding growth. But then the third key factor here is that we inevitably have got an element of holding elasticity impacting the numbers in there as well. So it's a complicated picture with lots of moving parts, and one which we're tracking very closely. In terms of emerging trends, our consumers are telling us that they're increasingly looking to cook affordable meals at home in order to save money rather than getting a takeaway or eating out. And as you know, we've got a broad portfolio of leading brands which resonates strongly with consumers. And many of our follow-up names are wealth additions to help consumers create those tasty, affordable meals in a convenient way. In terms of what we've actually observed in the quarter, you know, both backers and missing noons have both seen particularly strong growth and we believe that this is an indication of what consumers are telling us, which is them looking to make both tasty, affordable, convenient meals at home. And as we look forward over the next six months, in the research is suggesting that well over half of consumers in the UK are now planning to save money by reducing the number of takeaways that they're going to buy and how frequently they eat out. And, of course, look, you know, we all need to eat, don't we? And, you know, cooking at home is always going to be the cheapest option. And depending on how you choose to prepare your meals could also well be healthier as well. So therefore, with a greater proportion of meals likely to be eaten at home, we expect to be a beneficiary of that trend, obviously. Now, yes, there may well be a trend with some consumers purchasing more of label products, but we expect that with more meals being eaten at home, that that will be a significant offsetting effect. Moving on to our non-branded sales, so you can notice in the middle our non-branded sales were up 19% in the quarter, and this is driven by three very specific effects. So firstly, remember that our non-branded sales include sales through out-of-home average, and obviously those sales are now recovering strongly from the pandemic restrictions, along with the wider recovery of the out-of-home sector. And secondly, we've won some new private label contracts in Switzerland, And then, of course, as you would expect, there's some pricing benefit in here as well. And to be clear, what we're not seeing is any widespread effects of consumers trading down to our branded product bases into private label. And I think, anyway, you can see the evidence of that in our continued increase within market share. And then, sweetly, both Happy and Mr Kipling grew their sales in the quarter with a combination And as I mentioned earlier, there's the gifting benefits from the new piano TBS advertising and also the new deliciously good non-ACFS range, which has been well received by consumers. And the Capricorn age actually continues to perform very well as well. And you'll also be aware that one of our key strategic road pillars is to deliver great overseas. And as I've said before, this will be in the key target markets of Ireland, Australia, North America and Europe. And within these target markets were focused, of course, on Mr Kipling and Charlotte, other than Ireland, which is a more established business and carries a broader portfolio of brands. So our international business performed very well for us again over the first quarter. Sales were up by 12% on a constant currency basis. And the key driver of that was actually in Australia, obviously one of our key target markets. where we delivered particularly good performance from Mr Kipling in Cadbury. And in fact, Mr Kipling achieved its highest ever market share of over 11% and extended its position as the number one brand of the category in Australia. Now, together with an increase in Cadbury case market share as well to over 6%, we've now got a 17% share of the case market in Australia. We've got the number one and the number two brands, and as we continue to build towards the strong position that we occupy in the category of the UK. And this performance is really to continue strong performance of our core range and getting that core range execution into In Ireland, Nick and Noodle continue to perform very well as they've done in the UK as well and in Canada and Spain we've had success in expanding the distribution of charwood which we expect to deliver benefits as we go through the year. Another of our strategic growth pillars is taking the brand-building capabilities that we've demonstrated in our core brands and expanding them into new categories in the UK. And as I mentioned, we've got a number of live initiatives in market here that take us out of our traditional categories into logical adjacent categories. And we're in the early stages of this, as I remember, but the porridge that I mentioned earlier is an example of that. And so with that, as a brief review of the first quarter's trading, our pathway has begun to provide a brief update on credit ratings. Thank you, Alex. Good morning, everyone. So, I just wanted to, I guess, update on credit voting. So, following the strong strategic and financial progress we've made in the last couple of years, it really seems we've got two further upgrades recently from S&P and Moody. They're really recognising the progress we've made and we obviously appreciate the constructive dialogue we've had with them over the years. So, when that move up to S&P now rates us as double B, and that's an upgrade from double B minus, and Moody's are now B83, up from B1, from both of the stable outputs. So this brings us to at least five upgrades across S&P and Moody over the last two years. Thanks, Duncan. And as we look forward to the rest of the year, we will, of course, bring further new products to market. We'll continue to increase our investment behind the brand and also to build our own new businesses and expand that presence in new categories. So I think we've got a strong quarter one behind us, and with common input cost pressures mitigated, we're firmly on track now to deliver on our full-year profit expectations. Thank you very much for your time. I'll now pass back to the operator and we'd be very happy to take your questions.

Thank you. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. When preparing to ask your question, please ensure your phone is unmuted locally. As a reminder, that is star followed by 1 to ask a question. Our third question comes from Charles Hall from Peel Hunt. Charles, please go ahead.

Morning, Alice. Morning, Dalton.