Premier Foods plc

Thank you very much and good morning, everyone. Thanks for joining this, our quarter three trading update call. That, of course, covers 13 weeks to the 31st of December 2022. I'm also joined on the call this morning by Duncan Leggett, our Chief Finance Officer. So I'll just give an overview of the third quarter trading before handing over to Duncan to provide an update on our manufacturing footprint. And then we'll open the call, as usual, for questions. So the headline today is that we've had a really strong quarter three in what is, of course, our most important trading quarter. And so that's building on the trading momentum that we've delivered already so far this year. And the promise is particularly evident in our grocery business and with all of our major brands delivering excellent sales growth compared to last year. And so with this strong quarter now behind us, we're well on track to deliver on expectations for the full year. If 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 12% compared to last year, and so year-to-date now group sales are ahead by 8.6%. So Q3 was therefore obviously stronger than the performance that we reported on in the first half of the year. Now, just to note that these figures exclude the impact of the Spice Taylor, and I will come back to Spice Taylor shortly, but if you include the Spice Taylor, then group sales growth was 13.3%. And then, of course, building and growing brands is core to our business model. And so, importantly, our brand grew by 8.8% in the quarter compared to last year, which means that we're now up 5.9% year-to-date. And I think this demonstrates the strength and continued relevance of our brands to consumers in the current economic environment. And, of course, that great brand performance continues to be underpinned by our brand's growth strategy, the leveraging of our great market-leading brands, and bringing highly relevant new product innovation to market that's based on our in-depth understanding of consumer needs and consumer trends. And then, of course, we also support our major brands in engaging in meaningful advertising and marketing campaigns, and that keeps the brands relevant and top of mind for our consumers. And then we deliver excellent in-store execution for our strong retail partner system. Whilst that's always important, it's especially the case in quarter three, which, as I said, is our key quarter in terms of sales. And if you were out and about and got a chance to look in any stores on the run-up to Christmas, you'll have seen that many of our products are being displayed around the store. Yet again, we've invested behind many of our brands in the quarter with Bisto, OXO, Mr. Kipling, Bachelors and Ambrosia, all benefiting from TV advertising in the run-up to Christmas. During the quarter we brought to market several new products, a number of which were geared towards people enjoying Christmas lunch and this included ranges such as Bisto pigs in blankets flake of gravy, OXO turkey stock cubes, Paxo turkey and bacon stuffing and Bisto roast potato seasoning and we also introduced a new local version of Paxo stuffing. Additionally, we've recently launched further new products focused on healthier and also plant-based eating, and that includes Plantastic Millionaire Flatjacks, Plantastic Protein Boost Popsmacks, Atula's Meat Free Pops, and I should point out that this marks a change in our approach to Plantastic and that's based on all our learnings from consumers so far with the brand and this new generation of Plantastic products are designed to be delicious first and foremost, and then they happen to be plant-based. There is no taste compromise for the consumer by eating a plant-based product. In fact, personally, I think the New Millionaire flatjags are one of the best tastes we make, full stop, plant-based or not. In terms of market share, our grocery brand continued to take a healthy amount of incremental share at an overall level, so up 66 basis points over the 12 weeks of the 31st of December. As I've said before, we see this as a significant outperformance that reflects the strength of our brand, our proven brand growth model, and the strength and depth of our customer relationships. But in this top environment, where consumers are continually seeking value, this share performance is a strong indicator of our brand's resilience and how well they're positioned for future growth. If we now look into the details of some of the brands that have driven what was such a good quarter for us, The first thing to mention is that, and this is particularly the case in the grocery business, that the grocery scene is broad-based across the brand. So obviously pricing has played a significant role in that race. One thing that we did see this year was a particularly strong run-up in the week before Christmas as we sensed that many shoppers left their food shopping for that week before. All of our major grocery brands increase their sales either high single digit or in double digits for the quarter. Many of our product ranges are very popular as part of preparing Christopher lunches, so Bisto gravy, Oxford stock, Paxos stuffing and Ambrosia custard. And this year with no exception, as all of these delivered strong grocers. And not only did the established seasonal flavors do well, but we also launched new products to accompany Christmas dinner, such as a Bisto King in Blanket Flavor Gravy Banner, which I mentioned earlier, and which proved popular with consumers. So not only did those brands and product ranges perform well for us, but Sherwood, which grows some cooking sources and accompaniments, also had an excellent quarter, supported by our Best Restaurant in Town media campaign, which provides tasty and affordable meal ideas for consumers. And this campaign has proven to be very successful, and so much so we'll be extending the reach of this campaign in quarter four by moving it from a digital-only campaign along to mainstream TV. Yet again, Nissin, Sober and Cup Noodles continue their remarkable growth trend. As we've said before, these products deliver incredibly well on authentic product quality, and this, which drives a strong repeat purchase rate, has translated into exceptional sales growth. Their sales grew by almost 50% in the quarter, and the brand continues to increase its market share in the category and extend its leadership in the authentic noodles market. And despite the failure, it's performing well, so exactly as we expected, in fact. Sales grew double digits compared to last year, and also the integration is well on track. Now, turning to our street food business, which I remember has grown consistently well over recent years. Sales are actually 0.9% lower on this in the quarter, with non-branded up 22.7% and branded down 10.8%. And there's a very specific one-off reason for that, which I'll come back to in a moment. Mr. Kipling, in fact, increased its sales in the quarter, as the established core slicers range, both in its flat-pack format and also in the smack-pack format, both delivered good growth. and the launch of our non-HFF version of mince pies, which we call the illicitly recessive pies, helped deliver market share gains in the mince pie category of the quarter. Cabbage sales, however, were heavily impacted by some unscheduled maintenance on one of our mini rolls manufacturing lines, which resulted in a few weeks of lost production. Now, I'm glad to say that work's now been completed. Production did restart just before Christmas, and normal service to customers has now resumed. So, as I say, a specific one-off issue. In non-branded, some trends that we've seen in the first two quarters of the year continued into quarter three. The grossly non-branded sales increased by 29.3%, whilst retreats non-branded grew by 22.7%. Revenue in grossly non-branded has continued to see the benefit of a recovery and out-of-home hospitality volume in the third quarter compared to prior years, and also pricing benefit from retailer and label contracts. And a combination of new contracts in pies and tarts and price benefits delivered strong revenue growth in non-branded fruit treats as well. So therefore our year-to-date basis grocery and fruit treats non-branded have grown by 23% and 24% respectively. Now if we move on to talk a little bit about our overseas business, I'm pleased to say that we continue to make good progress on what is, as a reminder, one of our five strategic road pillars. So sales in quarter three increased by 10% of constant currency. And on a year-to-date basis, we're also at the same level. So consistent and strong progress this year and great to see from our international team. And we said that we've got three key brands now, which are the strategic focus for those of these, and they're Mr Kipling, Starwood, and now, of course, the Spice Taylor. And our future international expansion will continue to be focused on these three brands. Charlotte's delivered very strong growth in Canada, thanks to increased distribution of cooking sources in Walmart, and in Europe, growth was led by Germany, Cyprus, and Malta. In Australia, Mr. Chisholm continues to deliver great progress with further strong increases in sales, growing market share, which incidentally came at the expense of own label, and household penetration gains. And Leavens Bakewells, which we launched a few months ago, are doing particularly well, and they contribute to a fairly significant amount to that growth. Now, in the USA, as you know, we've been testing our cake proposition. It's performing very well with all the flavors that we've launched performing in the top two core sales when you rank all the cake sales that are sold in Target. And now we're looking to expand our distribution to additional new customers. I'd like to hand you over to our CFO, Duncan. He's going to provide a brief summary on the proposed closure of our night and manufacturing site and also briefly on pensions.

Thanks, Alex, and good morning, everyone.

So, those of you who follow us closely will know that we're focused on growing the leading brands we have in our portfolio. As a reminder, over 85% of our annual sales come from our branded portfolio. And it's really growing our brands through our established and proven branded growth model, which is how we deliver progress and generate value. So, our life on the site manufactures predominantly non-branded products, which attract much lower margins than the rest of the business. The site's underutilised and is marginally unprofitable at trading profit, so you can see this really doesn't have a strong fit with our great strategy. After careful consideration and subject to colleague and employee consultation, we're proposing to close the Knysen site. We know this will of course result in much uncertainty for colleagues at Knysen, and we'll support them as much as we can through this process. In terms of strategic rationale, we're increasingly focused on driving our branded business and investing behind and growing these brands. That's why, for example, we bought the Spice Day last year. This is a perfect example of a growing brand with further great potential that aligns very strongly with our five-pillar growth strategy. In terms of the existing business that is manufactured at Langdon, the branded products will be transferred to other sites in the group and most of the non-branded products will be carefully managed for exits Changes aren't expected to stay safe until the middle of this calendar year. What does this mean from a financial perspective? Well, subject to the outcome of the consultation, there'll be some restructuring and redundancy cash costs of approximately 10 million, which will be incurred next year in FY23-24. Ongoing, there'll be a small benefit to trading profit. Now, this is really from FY25 because of the phasing of the closure next year. But this is margin accretive to the group, although we, of course, will use this where we think appropriate to continue to invest back into business to grow our brand. In terms of the quantum of the sales we expect to exit, this is about £27 million. And because of the exit of the non-branded sales, this will have a positive benefit on our branded mix. just under 89% and just for clarity all the sales we're talking about are currently reported on our grossly non-branded in our sales segment disclosures. Then finally for me just to confirm that the 2022 pensions valuation remains the same and we'll update in due course. So that brief overview of nines and pensions I'll hand you back to Alex. Thank you Duncan. So I just want to recap on our five pillar growth strategy, which is what we're focusing on to build the business over the medium term. So firstly, continue to drive growth in the core UK business using our branded growth model, which we know works so well for us. So as you'd expect, we've got a full pipeline of new products for next year, which we're already working through the plans for launch over the coming months. Secondly, investing in our supply chain infrastructure to increase productivity and efficiency. And as you might recall, we've got plenty of capital projects in the pipeline which have attracted payback periods. The third pillar is then expanding into new categories in the UK and again deploying our proven brand of growth model but over a broader range of categories. And there's several examples of initiatives we're experimenting with here and they include things like the cake, curds and spice range, ice cream under Ambrosia and Mr Kipling brands and Ambrosia made sweet porridge pots which by the way have now reached a million pounds of sales so far this year. So lots of activity going on in that area. And then the fourth pillar is building our international business, of course, towards critical mass. And as you've seen today, the overseas business continues to progress well, and we're very happy with that progress. And then the fifth pillar in the strategy is looking for further modest bolt-on acquisitions to broaden our portfolio, and that's following on from last year's acquisition of the Spice Taylor, which was the first for 15 years. So this is a wrap-up from me then. So look, we've had a strong quarter three, and that has called out in particular our grocery brands, which performed particularly well. And we've grown faster than our grocery categories, so that's increasing our market share by 66 basis points. Our brands are demonstrating strength and resilience against the backdrop of a tough consumer environment, and that's underpinned, of course, by our brandless growth model. We're still seeing input cost inflation, and as previously commented, we'll continue to deploy a range of measures to deal with that. But in summary, we're well on track to deliver on expectations for this financial year. So all in all, I think we're in good shape for the rest of this year, but also now as we look forward into next year as well. And with that, I'd like to thank everybody for your time, and I'll stop there. We'll pass back to the operator, and we'll be very happy to take any questions. Thank you.