Premier Foods enjoys exceedingly good pricing power

There’s only one verdict which fits the stock market scorecard for Mr Kipling maker Premier Foods over the last few years: exceedingly good.

Premier Foods’ half year results are evidence of the progress the company has made, and continues to make, despite cost-of-living pressures. At one time this was virtually a zombie business thanks to an onerous debt pile.

AJ Bell’s Russ Mould said: “Now, with its balance sheet whipped into shape and a focused portfolio of winning brands, Premier Foods has been brought back to life and is demonstrating genuine pricing power to protect its margins from the impact of rising input costs.

“People are clearly prepared to pay a bit more when it comes to cupboard fillers like Oxo, Bisto, Mr Kipling, Homepride and Paxo rather than trading down to cheaper unbranded alternatives. Premier Foods continues to follow the blueprint established by larger US food producers of innovating within its brands to create spin-off products.

“Premier Foods has benefited from consumers feeling too pinched to eat out or order takeaways as often they used to. It seems as if there is a tailwind for more meals prepared at home – hence the launch of a ‘Best Restaurant in Town’ affordable meal campaign.

“Premier Foods has successfully taken costs out of the business as it looks to contend with inflationary pressures, though it has to be careful not to take this too far and risk damaging its much-improved operational performance.”