We all know its products!
This food producer’s brands include Ambrosia, Angel Delight, Atora, Batchelors, Be-Ro, Bird’s, Bisto, FUEL10K, Homepride, Loyd Grossman, Marvel, McDougalls, Mr Kipling, OXO, Paxo, Plantastic, Saxa, Sharwoods, Smash, The Spice Tailor, and also a licence with Cadburys for cakes, home baking and ambient dessert products.
The group, which is the UK’s fourth largest such maker, proudly claims that some 90% of all UK households buy one or more of its products each year.
I don’t know about your household, but mine certainly has hundreds of this group’s products on our shelves during any one year.
And with such top name brands I would bet that it is similar in your home too.
In fact, the group’s iconic brands, feature in millions of homes every day.
A Long Time Building
The creation of Bird’s, the oldest of Premier’s brands can be dated back to 1837.
Similar important timelines can be identified in 1908 with the invention of Bisto gravy, while in that year OXO sponsored the London Olympics.
In 1917 the Ambrosia creamery was set up in Devon, from which it helped to supply dried milk to troops in the First World War.
Other notable dates in the group’s history include: the 1967 creation of the Mr Kipling brand, which has remained the UK’s top cake brand since the late 1970’s; actress Lynda Bellingham first appeared as the OXO mum in 1983, staying for the next 15 years; and the group going public in 2004.
Today over 86% of the group’s total revenues come from its branded products.
Last year the group’s current brand portfolio helped it to generate over £1bn in sales, having grown at an average 5.3% in each of the last three years.
Furthermore, it has a portfolio of category-leading brands, with market leadership in five categories: cooking sauces and accompaniments with 15% market share; 44% of flavourings and seasonings; 36% share in quick meals, snacks and soups; ambient cakes 19%; and 39% of the ambient desserts market.
The group today, which has over 4,000 employees, operates from 15 sites in the UK and operates a multi-format, multi-channel approach to serving a broad range of customers, including major UK supermarkets, discounters, e-commerce channels, convenience stores, wholesalers and foodservice operators.
The company claims that it aims ‘to create great tasting products that contribute to healthy and balanced diets, while committing to nurturing our people and our local communities, and going further in the pursuit of a healthier planet, in line with our Purpose of 'Enriching Life Through Food'.’
Interesting Shareholders
With some 869m shares in issue, the largest holder is Nissin Foods Holdings, the Japanese-based but totally global noodles and snack pot business, with 24.27% of the equity.
Other large holders include Van Lanschot Kempen Investment Management (5.52%), Brandes Investment Partners (4.86%), M&G Investment Management (4.02%), JP Morgan Asset Management (3.64%), Dimensional Fund Advisors (3.63%), Southeastern Asset Management (3.54%), The Vanguard Group (3.04%), Paulson & Co (2.94%) and Fidelity Management & Research (2.40%).
Analyst Views
Taking a consensus average of six analysts that follow the group, they look for 177p for its shares, while 200p is the highest aim.
Taking a positive view of the recent statement that pension deficit contributions will have been suspended from the start of this month, analysts are suggesting that will save the group some £3m a year, thereby boosting its cashflows.
The analysts are now anticipating a ‘re-rating’ for the group’s shares.
Estimates for the year to end March 2024 range around £1,120m revenues (£979m), with adjusted pre-tax profits improving from £137.2m to £152.5m, lifting earnings to 12.9p (12.6p) and boosting the dividend to 1.7p (1.4p) per share.
For the current year estimates are out for £1,170m sales, £160.5m profits, 13.75p earnings and a 2.10p dividend per share.
My View – a FOMO stock?
We will have to wait to see what the last year’s results will actually look like, which should happen in about six weeks’ time (16th May).
However, the recent ‘reprieve’ on the pension deficit payments gives the group quite an important boost.
It also could help to promote the attractions of the group to any potential bidders, including Nissin.
The shares, which are now trading at around the 147p level, help to value the group at a healthy, but attractive £1.29bn.
Could a bid at around the 180p level set the ‘cat amongst the predatorial pigeons’ – who knows, but methinks it is best to be in than miss out.
