Sales at Premier Foods were up nine per cent in the final quarter of 2020, and 12.5 per cent year-on-year, shrugging off pandemic worries.
The business, which owns brands Mr Kipling, Bisto and Oxo, saw branded sales up more than 12 per cent this quarter, and 16 per cent year-on-year, driven in part by lockdown restrictions on eating out.
Grocery brands were a significant contributor to the performance, as sales increased by nearly 15 per cent in the quarter and almost 21 per cent in the year to date.
Elsewhere Mr Kipling is on track for a record year, with UK sales up seven per cent in the third quarter. The brand has benefitted from the launch of new product ranges and an extended period of marketing investment.
CEO Alex Whitehouse said Q3 proved to be “another period of exceptional growth”, with branded and non-branded sales up in the 13 weeks ending 26 December.
“Looking to the remainder of the year, out of home eating is likely to remain heavily restricted and we therefore expect to see continued high levels of consumer demand for our products.
“With more brand investment to come, we now expect trading profit to be in the range of £145-150m this year and net debt/EBITDA to fall below 2.0x by the year end.”
Following strong cash generation in the third quarter, Premier Foods will be redeeming a further £40m part redemption of its Floating Rate Notes due July 2022.
The move follows previous part redemptions earlier this year which amounted to £120m. This redemption is due to take place on 16 February 2021, will reduce the amount outstanding on the Notes to £50m and save the group a further £2m per annum in interest costs.
Following this redemption, an aggregate of £160m of the Notes will have been repaid during FY20/21, generating total pro forma interest savings of £8m per annum.