Premier Foods (AO) | Buy | FY25/26 first take: Key figures above expectations, 20% growth in DPS

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Premier Foods (AO) | Buy | FY25/26 first take: Key figures above expectations, 20% growth in DPS

Premier Foods Buy | Target Price: 220p

Company description Management

Premier Foods is a leading UK ambient food manufacturer with iconic brands Alex Whitehouse, CEO

including Mr Kipling, Bisto, Oxo, Ambrosia, Sharwood's, Loyd Grossmand and Duncan Leggett, CFO

Batchelors. The Group generates c. GBP1.1bn of revenue (88% branded), mainly Colin Day, Group Chair

in the UK, across two divisions (Grocery and Sweet Treats), serving major Key shareholders

supermarkets. The company's strategy focuses on brand investment and Free float 73.05%

innovation, selective international expansion, and inorganic growth Nissin Foods Holdings Co Ltd 24.27%

opportunities through bolt-on acquisitions. Van Lanschot Kempen NV 6.96% JPMorgan Chase & Co 5.13%

Investment case Valuation methodology

Defensive staples: resilient core brands, ongoing efficiency and Blended approach utilising a DCF model and multiples (P/E and

pension cash relief support sustained strong FCF. EV/EBIT).

Organic growth optionality through innovation, new categories Our DCF model uses a 1.5% long-term growth rate and a 9%

and international drive mid-single digit top-line. WACC.

Inorganic growth through bolt-on acquisitions. We apply a 10x EV/EBIT target multiple.

Catalysts Risks to our rating

Branded sales growth. Commodity and energy spike or FX headwinds.

M&A execution: Merchant Gourmet/FUEL10K/Spice Tailor. Retailer pressure and private label share gains dilute mix and

Dividends progression and other bolt-on aquisitions. margins.

Integration failure and/or under-delivery on growth from recent

M&A.

Key data charts

Price performance Sales split by region Sales split by division

SWOT analysis

Strengths Weaknesses