Mr Kipling owner Premier Foods hikes dividend as profit booms

Mr Kipling owner Premier Foods has today said it would hike its final dividend by 20 per cent thanks to higher profit and the suspension of pension deficit contributions.

The company, which also owns the Bisto, Oxo, Paxo stuffing, Ambrosia and Saxa brands among others, has been dogged by its vast pension funds for several years and has faced restrictions on cash returns to shareholders until deficits have been cleared.

However, it has earned more flexibility following the successful de-risking of pension obligations and the suspension of deficit contribution payments, which the company announced in early April.

Indeed, Premier has said the suspension of pension deficit contribution payments would free up £33m in free cash flow for the current financial year.

Overall, for the year to 30 March, the company reported a 15.1 per cent jump in headline revenue and 14 per cent jump in trading profit.

Adjusted profit before tax rose 15.1 per cent and the company reduced its net debt by £38.7m to £235.6m.

Premier Foods said revenue for its new categories had jumped up 72 per cent led by porridge pots and “driving Ambrosia to a £100m brand.”

It also said it benefitted from higher international revenue, which ticked up 12 per cent with brand The Spice Tailor now listed in 10 countries and “returns well ahead of original plan.”

It also invested £32.8m back into the business.

Alex Whitehouse, chief executive officer, said: “This has been another really strong year for the business with considerable progress across all our key financial metrics and five pillar growth strategy…Our brands continue to demonstrate their relevance to consumers, helping them cook and prepare nutritious and affordable meals during what has been a challenging time for many people.”

Whitehouse added: “We recently announced the suspension of pension deficit contributions, significantly increasing our free cash flow, which enhances our ability to invest in infrastructure and pursue M&A opportunities to deliver future growth. We have a strong set of plans for this year, across each of our strategic pillars and with our return to volume growth, we are on track to deliver on full year expectations.”