LONDON Britain's Premier Foods reported weaker than expected quarterly sales and lowered its full-year sales outlook on Wednesday, saying a warm start to autumn reduced appetite for its gravies and some desserts.
Shares of Premier, which had gained around 40 percent since the end of June, were down 13 percent at 45.50 pence by 0800 GMT. Premier spurned a 65 pence per share takeover offer in April from U.S. food maker McCormick.
Its actions were criticized at the time by some shareholders and the company has since been trying to improve its business, with increased marketing and cost-savings.
The maker of Bisto gravy and Ambrosia creamy rice and custards said group sales fell 5.4 percent to 172.5 million pounds in the three months to the start of October, leading to a 1.8 percent decline for the first half of its financial year.
Sales of its gravies and stocks fell 13 percent and sales of desserts dropped 9 percent.
Premier said that last month was the second-warmest September in Britain since records began and had a big impact on its grocery business, which accounts for 72 percent of sales and 84 percent of profits, according to analyst estimates.
The remaining business, which includes "sweet treats" like Cadbury cakes, performed well, however.
Premier said its profit expectations for the year were unchanged, due to careful management of costs, but that its sales would now rise by only 1 to 2 percent, versus a prior forecast for an increase of 2 to 4 percent.
It kept the 2 to 4 percent forecast for the medium term.
"Now management are obliged to take their foot off the marketing gas, reflecting and reminding of the realities of a still-tight investment and cashflow envelope," Jefferies said in a note. Jefferies as a "Buy" recommendation on the stock.
(Reporting by Martinne Geller in London; Editing by Susan Fenton/Keith Weir)