Bisto Maker Premier Foods Faces Tough Test in 'Challenging Market Conditions'

Premier Foods, the manufacturer of Britain's iconic Mr Kipling cakes, reported a slight rise in profits its first half operations, despite sales experiencing a tumble.

Trading profits rose slightly by 2.1% to reach £48.1m (€60.9m, $82.1m) for the company, which also makes Bisto gravy, OXO and Loyd Grossman sauces.

Sales have been faltering however, falling 6.1% "due to challenging market conditions in our categories".

In light of this and in a bid to re-build the brand, chief executive Gavin Darby says that the Hertfordshire-based firm would be upping its marketing activity.

"We remain convinced of the medium and long-term potential for our brands to deliver profitable growth. We plan to continue investing in innovation, marketing, our supply chain capabilities and our people to create long-term shareholder value," said Darby.

However, an evolving market has been tough for many food suppliers to adapt to and Premier Foods faces its slowest growth rate in almost a decade, with retailers, such as Tesco, Morrisons and Sainsbury's, all experiencing a dip in sales.

"We are adapting quickly to the changing external environment through retaining a tight control of costs and margins and have a strong programme of consumer marketing and new product introductions planned for the second half of the year," continued Darby.

"Assuming normal weather patterns, we expect an improved second half branded sales performance and our trading profit expectations for the year remain unchanged."

Such has been the challenge for Premier Foods that its share price has taken a bashing. Early morning trading on 22 July saw its share price fall by 0.5% to 46.25p, but this is drastically lower than the 183.44p it boasted in October 2013.