Premier Foods has said sales and profits were lower than expected in the second quarter after the exceptionally hot weather in September dampened customers’ appetite for gravy and desserts.
Shares in the company plunged 9% following the gloomy trading update.
The maker of Bisto gravy and Angel Delight said sales in the 13 weeks to 1 October were 5.4% lower than a year ago at £172.5m, and trading profit is expected to be lower than last year. Sales of gravy and stocks fell 13% and desserts 9%.
Gavin Darby, the chief executive, said: “We are disappointed that our grocery business reported materially lower sales in the quarter due to warmer weather, particularly in September.”
The company said its sweet treats businesses performed well over the period, with new products and business wins helping to drive sales up 6.4%. Premier said its Cadbury cake Amaze Bites were selling well in the first year.
Sales in its international business rose by more than 13% in the second quarter, and Cadbury cake ranges were launched in the United Arab Emirates towards the end of the quarter.
In the first half overall, sales fell 1.8%.
The company said group sales were expected to grow between 1% and 2% in the full year, but it maintained its medium term target of 2-4% annual sales growth. Sales rose 0.6% in the last financial year to 2 April 2016.
Darby said profit expectations for the full year were unchanged because costs were being managed carefully.
“We remain very confident in our strategic progress, our customer relationships are strong and we have an extensive new product innovation programme planned for the balance of the year,” he said.
The US company McCormick abandoned a proposed takeover of Premier, which also makes Mr Kipling cakes, in April, saying that after inspecting the books it could not offer a price acceptable to Premier.
McCormick, which makes Schwartz dried spices and sauces, made three approaches to buy Premier but was turned down each time.
Premier Foods has however strengthened its ties with Nissin, a Japanese instant noodles company that has built a stake in the UK company.
Premier is hoping to benefit from Nissin’s strength in key markets such as the US, China and Brazil through co-operation on branding and distribution. It also hopes to boost sales of existing products by using Nissin’s portfolio of patents to improve them.
Commenting on the fall in Premier Foods’ share price on Wednesday, Jasper Lawler, market analyst at CMC Markets, said: “The harsh reaction in the market reflects a lingering dissatisfaction over the deal that never was with McCormick. Premier Foods’ collaboration with Nissin Foods has not delivered the goods and pressure will begin to mount on chief executive Gavin Darby if that continues over the holiday season.”
