Premier Foods plc

Good morning, everybody. Thank you very much for joining us. And this is our quarter three trading update call, which covers the closing weeks of the purchase December 2023. I'm also joined on the call this morning by Duncan Leggett, our Chief Financial Officer. So as usual, I'll give an overview of the first quarter trading, and then we'll open the call up to questions. So as many of you will know, well, quarter three is our most important quarter. And I'm pleased to say we've actually had our biggest ever Christmas and we've caused the three sales in double-digit growth across the business and with significant market share gains. So the group sales increased by 14.4% and with branded sales of 12.7%. So branded sales are now up 14.6% on a year-to-date basis. And I think this demonstrates the strength and the continued relevance of our brands to our consumers in the current economic environment. And of course, that great brand performance continues to be underpinned by our brand and growth strategy, and that's leveraging our great market-leading brands and bringing highly relevant new products and innovations to market. And that's based on our in-depth understanding of consumer needs and trends. And we also support our major brands with engaging and meaningful advertising and marketing campaigns that keeps the brands relevant and top of mind for consumers. And then we deliver excellent in-store execution through our strong retail partnership. So whilst this is obviously always important, it's especially so in quarter three, which, as I said, is our key quarter in terms of sales. And if you did get a chance to look at any stores on the month of Christmas, I'm sure you'll have seen many of our product displays around the store. Now, this brand building model is actually very similar to that used by the large cap multinationals and the food businesses. In fact, we actually see ourselves as a much smaller version of one of those multinationals in the sense that we use the same brand building model. And the main difference, of course, is that we're still in the early stages of our international expansion. And now, as I've just said, brand investment is key to our brandless growth model. And we, again, invested behind many of our major brands in the course of Bisto, Oxo, Mr. Kipling, Bachelors, and Ambrosia, all benefiting from an overall up-weighted level of advertising support in the run-up to Christmas. In terms of product innovation, we again introduced a number of new products based on our in-depth understanding of consumers, and again, these have helped deliver incremental sales. So, some examples were Mr. Kipling's Best Ever Premium Mint Pines, which has received five-star reviews from consumers, Bisto Best's Mutely Gravy, and Paxo's Chicken and Bacon Stoppings, And Rosie Deluxe Consulate, which did particularly well over Christmas, as we saw people trading up and treating themselves. So this strong performance was notably ahead of the market, and so resulted in strong market share gains. In fact, overall, we gained just over 120 basis points of market share, which really is something that we're very pleased with, and illustrates just how well we're competing in our market. It's worth noting that these share gains were similar in both grocery and sweet treats categories, so a very similar shape to the sales results we've reported this morning. This significant outperformance again reflects the strength of the brand, our proven brand of growth model, and the strength of our customer relationships. The growth was once again pretty broad-based across the brands, and pricing continues to play a significant role in that growth, of course. Although, of course, what's going to happen is that pricing will start to drop out during quarter four as we last made a price increase last year. So we also saw an increase in retail volumes as we went through the quarter with retail volumes up versus a year ago in the key trading week just before Christmas. Looking at our grocery business, the sales increased by 11.9% and by 11.6% for our brands. and many of our brands and products are of course particularly popular over the Christmas period and that includes brands like Pisto Gravy, Oxo Stock, Paxo Stuffing and Bravia Custard and this year was no exception as all of these delivered strong roasters. Not only did the established seasonal favourites do well but we also launched new products to accompany Christmas dinner which included Paxo Chicken Baking Stuffing that I mentioned before. Nissen, Sober and Cotton Noodles again grew strong double-digit as its great progress continued towards what is now rapidly becoming a £50 million retail sales growth and in fact both Nissen and Bachelors have outperformed the category by some distance in the quarter and as a result we continue to cement our position as clear market leader in the Quick Meals, Feast and Snatch category. As you know one of our strategic pillars is to extend our brands into new categories and sales here more than doubled. So leading the way was Ambrevia Porridge Pops and during the quarter for the first time we advertised these on TV and we also added an Apple and Blueberry variant which is performing very well indeed and all we've held market share step forward again now reaching 7.5% of the on-the-go porridge market and up to 14% in our best performing customers. We also achieved new listings for Mr Kipling in the names of the right ice cream in two major retailers and that's given sales significantly higher in the quarter. So we're really very pleased with the progress that we're making in new categories so far this year. And our described retailer which we've now owned for coming up to a few months continues to perform very well and delivering further double digit growth compared to last year and benefiting from distribution gains in the UK and in overseas markets and I'll come back to that overseas rollout of the Spiked Tail assuredly. So turning to sweet treats sales increased by 21.3% and the branded side of the business discerned a very strong growth with revenue up 17.1% and it was great to see Cadbury Cake back in significant growth with strong performance and strong corn mini rolls and cake bars and we last time unshifted those maintenance on the manufacturing line last year if you remember. This Christmas we sold mince pies just as popular as ever, we sold 195 million of them, that's 4 million more than last year, and that was helped by the launch of Mr Kipling's new and best ever premium mince pies. Looking at the non-branded business, sales grew by 22.4%, that's excluding nice and foods of course, Grocery non-branded sales increased by 14.5% while sweet treats non-branded grew by 28.7%. Revenue in grocery non-branded compared to the prior year was due to pricing of a retailer and label contracts. Revenue in sweet treats was a combination of new contracts that we won in pies and tarts and pricing of the growth climbers. So this growth in the quarter is below that seen in the first half of the year as the pricing effects have begun to moderate. Our overseas businesses may serve a good progress. We're in 11% sales growth as we continue to expand distribution of our products in our strategic focus markets. And you might remember we've got three key brands which are our strategic focus for the overseas. So then Mr Kipling and Charles and now the Spice Tailor since we bought that brand. In fact, with the Spice Tailor, we've been making really good progress in rolling it out to new markets. When we acquired the brand, it was mostly present in the UK and Australia. But we are now in, or at least got confirmed listings in a total of 10 countries. And this includes New Zealand, Canada, and our first listing in the United States. And in Europe so far, we've agreed listings in Belgium, Switzerland, and France, as well as a step change in distribution in Ireland. So our future international expansion will continue to be focused on these three brands. And whilst in parallel, we're also exploring the potential for fuel 10K overseas, So looking at Australia, both Charlotte and the Spice Tale were major contributors to the performance and that was driven by strong in-store execution. In North America, Charlotte grew by 20% as we gained distribution in more stores. And in cake, we've also just landed over 800 new store listings in Canada. So on top of what we've already gained in the US, we're now close to 3,000 stores across North America. To put that in context, Mr. Kipling will now be in more stores in North America than it is in Tesco in the UK, which of course is all the Tesco stores in the UK. And of course at this stage this has been a much smaller product range, but that should give you some context in terms of store numbers. Moving on to Ireland, the business enjoys another very good quarter with sales up 27%, and particularly strong growth from the grocery brands. So Oxford and Bixby, they've had really strong purchases with sales of over 50%, and the lack of benefiting from advertising in the months of Christmas. So if we now look ahead, support reform, and as you'd expect, and we've got strong plans in place, including further new product launches, advertising support for our brands, and impact for execution by industrial stores. We do, of course, expect the level of top-line growth to begin to reduce, as the year-on-year impact of pricing falls away during the quarter. And as we move into the next financial year, we expect to see some more normal levels of top-line growth split between the blend of volume and price mix. So maybe think about the top-line growth that we were consistently delivering pre-pandemic. So really just to wrap up then, we've had our biggest Christmas ever with double-digit branded sales growth in grocery and sweet treats for the quarter. underlined by significant market share gains of over 120 basis points. And we've also continued to deliver against the other pillars in our five-colour growth strategy with those new category sales of 108%, led by the Ambrosia Porridge and the Mr Kitten and Angel's Light Ice Cream. Our international business grew by 11%, and Spice Tailor and Fuel 10K continue to progress very well, and the integration of Fuel 10K is running to plan. So all in all, I think we're in good shape for the rest of this financial year and well on track to deliver on the previously upgraded expectations. So with that, I'll just thank everyone for your time. I'll stop there and we'll pass back to the operator and we'll be very happy to take any questions. Thank you.

Thank you. We will now start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. Our first question today comes from Charles Hall from Pilhar. Your line is now open.

Morning, Alice. Morning, Jonathan. Morning, Jonathan. Well done. Another excellent quarter and great to see the momentum continuing. Can we just chat a little bit more about Q4 and going into next year with much lower inflation in the system and what you're doing in terms of driving volume? And obviously, new product launches is part of it. But what are you doing on promotional activities?