Shares in Premier Foods dropped 12pc after the British manufacturer behind Bisto Gravy and Ambrosia custard revealed a drop in sales between July and October.
The food group, which earlier this year rejected a £1.5bn takeover bid by US spice maker McCormick, said sales fell 5.4pc to £172.5m in the 13 weeks to October 1, blaming the warm weather for a drop in demand for its branded grocery products.
Premier Foods, which has been under pressure to justify to shareholders that turning down McCormick’s improved 65p-per-share offer in March was a good idea, said despite the lacklustre results is still track to hit full-year profit and sales targets.
Sales of gravy and stocks, including Oxo cubes, fell by 13pc, while dessert sales dipped 9pc at FTSE Small Cap-listed Premier. Its stock fell by as much as 12pc on Tuesday morning to 47p.
Premier Foods, which is investing in sweet treats to turn around its fortunes, said this part of the business held up well. Sales from Mr Kipling cakes, Cadbury Amaze Bites as well as its unbranded sweets rose 6.4pc, marking a sixth consecutive quarter of growth.
“We are disappointed that our grocery business reported materially lower sales in the quarter due to the warmer weather,” said Gavin Darby, Premier Foods’ boss, who shunned a cash takeover by McCormick in favour of a collaboration with Japan’s Nissin Foods.
“Sweet treats and [the] international businesses continued to demonstrate their strong momentum,” Mr Darby said. “We remain very confident in our strategic progress.”
Premier Foods expects full-year sales growth to reach between 1pc and 2pc. Analysts predict sales will hit £812.2m in the year to March 31 2017. It is forecast to make £73.7m in pre-tax profits, from a £13m loss the previous year.
