Premier pleased with strong Hovis sales

by Eric Schroeder
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LONDON — Net sales within the Hovis division at Premier Foods P.L.C. fell 3.7% to £742 million ($1.2 billion) in 2009. Despite the decline, Premier, in a trading update issued Jan. 12, said the Hovis division “had a very successful year in line with the strategy launched in 2008 to grow the Hovis brand.”

Premier said strong branded sales growth in bakery has been positive to profit, while milling profit has increased as positive mix has more than offset lower volumes.

In the year ended Dec. 31, 2009, Premier said branded bakery sales totaled £370 million ($603 million), up 13% from 2008.

“Hovis’ market share increased by 3 percentage points over the year to 29.5%,” the company said. “Sales were driven by improved product quality, better distribution, improved marketing and promotional activity. Year-on-year branded sales growth in Q4 2009 was 7.5% with Q4 2008 the first full quarter to benefit from the Hovis relaunch.”

Meanwhile, retailer brand bakery sales in 2009 totaled £179 million ($292 million), down 16% from 2008.

Premier Foods said the decline reflected an 18% decline in the market for retailer brand bread as well as the company’s decision to exit some contracts in the third quarter of 2009 to allow for the continued branded growth and lower own label volumes.

Milling sales in 2009 fell 17% to £193 million ($315 million), as third-party flour volumes declined 2.4%, primarily as a result of the exit from a low margin flour contract in the second half of 2008.

Premier Foods will announce preliminary results for 2009 on Feb. 16, but said overall sales are expected to total £2,661 million ($4,342 million), up 2.2% from 2008, with branded sales representing 63% of total sales, up from 61% in 2008. Trading profit is expected to be approximately £320 million ($522 million), an increase of about 3.5% over 2008.

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