Ambrosia proprietor Premier Foods income boosted by promotional pricing

Premier Foods’ profits surpassed expectations last year on the back of price cuts and a surge in customers buying porridge, noodles, and ice cream.

The food manufacturer reported its adjusted pre-tax profits grew by 15.1 per cent to £157.9million in the year ending 30 March, compared to analyst forecasts of around £153million.

Headline turnover increased by the same percentage to £1.12billion, largely due to soaring demand for ‘new categories’ and branded products in its grocery division.

Tasty brand: Premier’s revenue from Ambrosia exceeded £100million for the first time as sales of porridge pots more than doubled

The surge in trade also follows price reductions on multiple items as many consumers switch to cheaper alternatives amid the cost-of-living crisis.

Premier lowered prices on ranges such as Loyd Grossman cooking sauces and Batchelors Super Noodles in the second half of the period, although it continued to raise prices on its own-brand goods.

Meanwhile, revenue from Ambrosia exceeded £100million for the first time as sales of porridge pots more than doubled, supported by the launch of a new apple and blueberry variant.

Ice cream purchases also jumped by over half, thanks to the expansion of its Angel Delight and Mr Kipling ranges to more retailers.

And Nissin noodles enjoyed another bumper year, with sales of the Japanese brand rising by over 30 per cent to almost £50million.

Following the result, Premier’s bosses have proposed a 20 per cent hike in the firm’s full-year dividend to 1.73 pence per share.

Alex Whitehouse, chief executive of Premier Foods, said it was ‘another really strong year for the business, with considerable progress across all our key financial metrics.’

The FTSE 250 group cut its net debt by £38.7million to £235.6million, equivalent to 1.2 times its adjusted earnings before nasties, a record low.

Premier has struggled for some years with massive pension liabilities, but its pension deficit payments have been suspended since April.

The move is set to bolster the company’s cash flow by £33million this financial year, providing further opportunities to increase investment and dividends and spend money on mergers and acquisitions.

Recent takeovers by the group have included Asian food business The Spice Tailor and Scottish breakfast brand Fuel10K, which makes oat products, muffins, and granola.

Premier Foods shares were 2.8 per cent down at 164p on early Thursday afternoon, but have nonetheless expanded by about a quarter in the past 12 months.