Premier Foods – undervalued shares leave the group wide open to a foreign bid, shares 173p, average TP 236p

Mark Watson-Mitchell - 13.11.2025

This morning’s Interim Results from Premier Foods (LON:PFD) were better than expected, even though they showed no real advance in the six months to 27^th September.

Against toughening trading conditions, the group has reported a 0.7% increase in headline revenue to £502.5m for the half-year, with branded revenue up 1.9% to £453.0m, driven by strong performance in its Sweet Treats.

The trading profit saw a modest 0.4% rise to £70.5m, while statutory profit before taxation increased by 18.5% to £63.4m.

The company also reduced its net debt by £14.2m to £207.1m and is on track to meet its full-year trading profit expectations, supported by strategic progress including capital investment of £23.3million and the acquisition of Merchant Gourmet.

The Business 

In around 89% of UK households, you will find Premier Foods products.  

The 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. 

Its various brands achieve #1 status in their key categories.  

Some 88% of the group’s total revenues is derived from its own branded products. 

The group, which has over 4,000 employees, operates from 13 sites in the UK and adopts 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. 

Management Comment

"We've continued to make strong progress across all our strategic pillars in the first half of the year.”

Commenting on the current year outlook, CEO Alex Whitehouse went on to state that:

"Looking forward to the remainder of the year, we expect branded revenue growth to build, supported by both a particularly exciting product innovation programme and increased H2 marketing investment across a broader range of digital communication platforms.

In terms of capital investment, we expect to spend around £55m this year which will deliver attractive returns.

We'll be driving benefits from the Merchant Gourmet acquisition and integration, and we continue to explore additional inorganic opportunities which fit our M&A criteria.

With this continued strong strategic momentum, we remain on track to deliver on full year Trading profit expectations."

Broker’s View

Analysts Darren Shirley and Clive Black, at Shore Capital Markets, actually upgraded their estimates on the back of this morning’s results statement.

For the year to end-March 2026 they estimate revenues of £1214m (£1148m) with adjusted pre-tax profits of £176.4m (£169.3m), lifting earnings to 15.0p (14.3p) and dividend of 3.4p (2.8p) per share.

They see sales of £1277m in 2027, with £182.3m profits, 15.5p earnings and paying a 4.0p per share dividend.

In My View

This group’s shares are certainly not expensive at the current 173p, especially as they trade on only 11.5 times current year price-to-earnings.

In the last year they have been as high as 216.50p, whilst their lowest was 168.80p.

If the group continues to perform as well as it has done over the last year or so, in such tricky trading conditions, and its shares trade at such undervalued levels – then I feel that it is wide open to an overseas based bid approach.

(Profile 29.06.20 @ 67.5p set a Target Price of 101p*) 

(Profile 01.11.23 @ 117.5p set a Target Price of 152.75p*)