Premier Foods continues to offer an appetising investment with outlook at "top end" of expectations

Down 4% at 195.6p (£1.7bn) - Half-year Results

Premier Foods is the home of 20 food brands, including the likes of Batchelors, Bisto, Oxo and Mr. Kipling.

These were solid H1 results that included a strong outlook statement for FY March 27 (which the company refers to as FY26/27).

Let's skip straight to that outlook statement:

This year the Group now expects net regular interest to be approximately £18m, Trading profit to grow around 3-5% ahead of FY25/26, with full year adjusted Profit before taxation and adjusted earnings per share now projected to be at the top end of current market expectations. With an increasingly resilient business, and a strong balance sheet from which to acquire more higher growth brands, the Group remains confident in delivering further strategic progress over the medium term.

Net debt has fallen year-on-year to £131m, although it is up over six months (a year previously: £207.1m; March 2026: £95.2m).

And there's been an important refinancing: a fixed 3.5% rate has been replaced by an RCF and a term loan at floating rates.

The floating rates are currently higher than the old fixed rate, but it seems that the flexibility of the new facilities, combined of course with the company's free cash flow, should result in Premier Foods carrying lower gross debt and therefore paying less interest. Or in the words of the company itself:

The refinancing reduces expected financing costs and provides additional flexibility to support the Group’s growth strategy.

Please note that this refinancing wasn't fully executed until October, and so its effects are not visible in today's statements.

But the point stands: a lower debt load and a more flexible facility means that interest costs can become less of a burden.

Overall performance in H1 was fine:

• Revenue +2.5% (£514.5m)

• Trading profit +2.4% to £72.2m (operating profit £63.7m)

• Adjusted PBT +3.8% (£64.7m)

I've checked the reconciliation between trading profit and operating profit, and my main concern is £7.7m of "non-trading items", £6m higher than the corresponding figure in H1 last year. So we don't get a really clean result this time around. The reason given is "organisational restructuring costs and the disposal of a non-trading entity."

Graham's view

We were moderately positive on Premier Foods at the beginning of this year - see Roland's comments in January.

It has had a fine year in terms of share price performance:

Forecasts have been very stable:

At an earnings multiple of about 12x, I think it continues to offer reasonable prospects, and so I am happy to maintain our existing stance.

The brands are (literally) household names, and the potential for Premier Foods to eventually get taken over isn't lost on me.

In the short term, the reduction in net debt gives the company much greater flexibility in addition to reducing the drag of interest costs and helping to justify a double-digit earnings multiple.

And in the long term, I expect that its diversified portfolio of food brands will continue to enjoy reasonable pricing power, as they have in the past.

So yes - a moderately positive stance here makes sense to me.