(Adds analyst comment, background)
LONDON Oct 12 Britain's Premier Foods
reported weaker than expected quarterly sales and lowered its
full-year sales outlook on Wednesday, saying a warm start to
autumn reduced appetite for its gravies and some desserts.
Shares of Premier, which had gained around 40 percent since
the end of June, were down 13 percent at 45.50 pence by 0800
GMT. Premier spurned a 65 pence per share takeover offer in
April from U.S. food maker McCormick.
Its actions were criticized at the time by some shareholders
and the company has since been trying to improve its business,
with increased marketing and cost-savings.
The maker of Bisto gravy and Ambrosia creamy rice and
custards said group sales fell 5.4 percent to 172.5 million
pounds ($215 mln) in the three months to the start of October,
leading to a 1.8 percent decline for the first half of its
Sales of its gravies and stocks fell 13 percent and sales of
desserts dropped 9 percent.
Premier said that last month was the second-warmest
September in Britain since records began and had a big impact on
its grocery business, which accounts for 72 percent of sales and
84 percent of profits, according to analyst estimates.
The remaining business, which includes "sweet treats" like
Cadbury cakes, performed well, however.
Premier said its profit expectations for the year were
unchanged, due to careful management of costs, but that its
sales would now rise by only 1 to 2 percent, versus a prior
forecast for an increase of 2 to 4 percent.
It kept the 2 to 4 percent forecast for the medium term.
"Now management are obliged to take their foot off the
marketing gas, reflecting and reminding of the realities of a
still-tight investment and cashflow envelope," Jefferies said in
a note. Jefferies as a "Buy" recommendation on the stock.
($1 = 0.8042 pounds)
(Reporting by Martinne Geller in London; Editing by Susan