Premier Foods Plc shares plunged after the maker of Mr Kipling cakes said September’s warm U.K. weather quelled demand for products such as Bisto gravies and Ambrosia custard.
The stock fell as much as 18 percent to 43 pence in London, the steepest drop in six months. It’s now worth one-third less than the 65 pence-a-share takeover proposal from U.S. spice producer McCormick & Co. that the company fended off in April.
The news is a blow to Chief Executive Officer Gavin Darby, who is under pressure to deliver growth after rejecting McCormick’s advances. Second-quarter sales fell 5.4 percent, Premier Foods said Wednesday, also cutting its forecast for full-year growth. The company said its profit expectations for the year are unchanged, though only after putting off a planned increase in marketing spending.
“We are disappointed that our grocery business reported materially lower sales in the quarter due to warmer weather,” Darby said in a statement. September was the second-warmest on record and every week in the quarter was warmer than the prior year, the company said.
Premier sold 13 percent less gravy and stocks products in the quarter, and 9 percent fewer desserts, leading to a 9.5 percent drop in branded sales at the grocery unit.
Revenue for the year through March will grow 1 percent to 2 percent, the company said, cutting the forecast from 2 percent to 4 percent, which remains its medium-term target.
“September’s heatwave was one that Premier Foods and its shareholders could have done without,” Martin Deboo, an analyst at Jefferies LLC, said in a note.
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