Premier Foods PLC

LSE:PFD

Earnings Call Transcript 2022-Q1

[Operator]

Good day, and thank you for standing by. Welcome to the Premier Foods Quarter 1 Trading Statement Analyst Call. [Operator Instructions] Please be advised that today's conference is being recorded. And I would now like to turn the conference over to your first speaker today, Mr. Alex Whitehouse. Thank you. Please go ahead.

[Alexander Whitehouse, CEO & Director]

Thank you, and good morning, everybody, and thanks for joining this quarter 1 trading update call that covers the 13 weeks ending 3rd of July 2021. So I'll give a brief introduction to our first quarter trading before opening up the call to questions. And I'm joined, of course, this morning, as always, by Duncan Leggett, our CFO. So I'll start by in a few headlines on our trading in the quarter. I'll then dive in to the few key areas to provide a little bit more detail. And then I'll hand over to Duncan who can give you a brief reminder of the refinancing that we completed in the quarter as well. And then as usual, we'll have some questions. So as a reminder, by the way, today, we're also holding our AGM, and that is at 11 AM. And we'll be holding that virtually again this year. So if any shareholders on the call who would like to attend and don't yet have the details, please do contact Richard Godden, Investor Relations, for details of how to attend this year's meeting. So on then to the quarter 1 results. And overall, I'm really pleased to say that we've had an encouraging start to the year. We've carried on the trading momentum from last year into the first quarter. And this combined with the significantly reduced interest costs means that we're now seeing our adjusted PBT to be at the top of our expectations for this financial year. Now when we spoke back in May, we set out a couple of things in terms of how we'll be measuring our progress this year. And I think, first of all, given the exceptional circumstances this time last year, when the U.K. was in that first quite strict national lockdown during the quarter and our volumes were equally exceptional, particularly in our Grocery business, so we said it will be sensible and appropriate to review our sales performance this year compared to 2 years ago as well as compared to 1 year ago. So for this quarter, that means we're comparing against the quarter to the end of June 2019.And also, if you'll remember, we provided then a range of where we expected our Q1 sales were likely to land, and that range was between 5% and 6% growth compared to a couple of years ago. And so we're very pleased therefore that we've come in at the top end of that range, with growth of 6.3% compared to the same quarter 2 years ago for the total group.And when we look at our retail grocery sales, and by that, I mean if we exclude the out of home channels, then these were up 13% during the same period, which compares quite favorably, I think, to how our retail partners have performed over a similar time frame. But for me, most importantly, is our branded sales. Our branded sales have performed really strongly, up 9.3% on a 2-year basis. And when we look at our Grocery business, branded sales were up 12% versus 2 years ago. So essentially, the equivalent of 2 years of 6% back to back growth, which is clearly well ahead from the historical growth rate of our categories. Now obviously, that strong branded sales performance is a direct result of us continuing to deploy our branded growth model, and then we made at the heart of what we're doing. And so as a reminder, of course, we start with the portfolio of brands which are leaders in their categories and with very high household penetration. And we then bring to market insightful new products, which are based on the current consumer needs and trends. And we support our major brands with emotionally engaging and meaningful marketing and TV advertising campaigns. And finally, and very importantly, we worked closely in partnership with our key retail partners and delivering excellent in-store execution for the brands. So during the quarter, therefore, we continued to execute the growth model. And with pace and with energy, 3 of our major brands: Sharwood’s, Mr Kipling and Batchelors received advertising during the quarter. And again, we brought a number of new products to market. Now -- in fact, you might remember that due to the challenges of COVID last year, there were delays to many of the retailers range reviews and the ranges obviously those are windows where we get our new products listed into store. And that resulted in some delays in the introduction of some of our new products from last year. So I'm pleased to say those retailer range reviews are now taking place. And we've seen some really very positive outcomes for our brands and through the distribution of our brands with much of the delay. [indiscernible] now coming through into the store. In fact, we've seen a rapid step-up in the percentage of sales that we derive from new products, which for the quarter was well ahead of how we ended last year and indeed how we ended the year before. So that's all very positive. And as a result of all that, we continued therefore to perform ahead of the market in the quarter, increasing our volume share versus last year.If you look at the brands that saw the strongest 2-year growth in the quarter, they weren't quite a large number actually. But in particular, I'd call out Sharwood’s, Ambrosia, Bisto, OXO and Paxo. And all these brands grew in double-digit percentages compared to 2 years ago. And we think again about the average industry growth rates over a longer period of time, they're clearly very strong performances. And additionally, all these 5 brands had a higher household penetration than in the same period in 2019, which demonstrates clearly that some of those new consumers who tried our brands last year during lockdowns are continuing to buy them again this year. In terms of some individual performances on Sharwood’s, and Sharwood’s is again a standout performer for us in the quarter. Sales were up 25% compared to the same period in 2019. It -- Sharwood’s received further TV support in Q1, and that was a continuation of the new TV campaign we started at the end of last year. And we also launched, of course, new products that have included vegan versions of our Korma and Tikka Masala cooking sauces. And that's as we extend our plant-based eating options across the business. Another brand that had an excellent quarter 1 was Nissin noodles. And when we took on the distribution of Nissin products over 3 years ago, sales were pretty modest. But since then, we've taken this premium authentic Nissin brand. And with the strength of our retail customer partnerships, we've built it into the clear leader in premium cup noodles in the U.K., with now almost GBP 20 million of retail sales value. Sales over the last 2 years were up a very significant 168% and grew 30% compared to last year.If we move on to Sweet Treats. Now Sweet Treats, we experienced very different trends to what we saw in Grocery categories over the last year. So consumer patterns in buying cake was not as heavily impacted during the lockdown restrictions. And so accordingly, we do not see the exceptional volumes in cake at this time last year what we did in our Grocery categories. So in the first quarter of this year, branded Sweet Treats were actually topped by 3.2% versus year ago, and that being driven by Mr Kipling, which had a very strong start of 7.5% growth in the quarter. And that's coming from things like the low sugar options, such as the 30% less sugar Angel and Lemon slices and further success on the new premium range in Mr. Kipling signature range. In terms of key consumer trends we're seeing, obviously, we're seeing people transitioning back towards eating at home more than they were earlier in the year. And we're also seeing people trying to maintain some of the good habits that they picked up last year. And I'm particularly talking there about eating more healthfully. And most consumers are also telling us they still want to try and hold on to the enjoyment they get from cooking at home and eating around the table together as a family.And if we move on to the online channel, and by that, again, I mean sales that we make by our retail partners online platforms. I know we're all aware that this channel saw a fairly significant growth last year and that lots of people moved to shop online during the worst of the pandemic. And you might remember that following the great deal of effort we've been putting into developing our business in this channel for a few years now. But remember, last year, when that category -- when the channel went through that incredible growth phase, we were able to grow even faster than the channel and increase our online market share. So now, as expected, as we start to anniversary that period from last year, what we're seeing is that most of the people who moved to buying their groceries online last year are sticking with it. And so our business through the online channels is nearly double than the level it was 2 years ago, and that's in line with the market. And we're also now providing our consumers with a range of healthier options to choose from is very much core to our strategy. And health and nutrition is incredibly important to us. And we've been doing a lot of work over a number of years now to bring more healthy ranges to market for our consumers. And I'm particularly pleased to see that our healthy option ranges in the quarter grew by twice the rate of our branded portfolio versus 2 years ago. And so that includes products like our healthy cooking sauces, things like the Sharwood’s, 30% less fat, [indiscernible] sauces and [indiscernible] Loyd Grossman no added sugar bolognese sauces. If we move now on to our international business. So you will remember that this is a key strategic growth pillar for the group looking forward. And that enjoyed a very strong year last year with growth of 23%. But I'm pleased to say we've carried that momentum forward into the current year and with sales on a 2-year basis up 17% in the quarter and holding on to all the gains that it made last year. I've talked before about our strategy for our overseas businesses, which is focused on building sustainable, profitable businesses of scale in selected markets. And we're doing this by applying the same proven branded growth model that we've got in the U.K., but adapting it then to the local market conditions and environment. So for example, in Ireland, where we've always got an established business, we're launching a series of new products that have already been successful in the U.K. So things like the Bisto Southern Style gravy or the Oxo meat free stock cubes and Mr Kipling Signature range of premium cakes. And we'll also be supporting our brands in Ireland with advertising again later this year. So that's for the second year run. And this approach in Ireland has led to our biggest brands in Ireland, Bisto, Sharwood’s and Mr Kipling, all increasing their market share over the last 12 weeks. And Bisto sales, in fact, were up by a very strong 11% year-on-year and also took 180 basis points of share. So it's pretty clear to us that adopting that same brand building strategy in Ireland is now starting to work really well for us. We've also expanded our category presence in Ireland through entering both the Quick Meals, Snacks & Soups category and also Home Baking. And these are categories where we have not historically been present in Ireland, so -- and it represents whitespace for us. And then in Australia. Mr Kipling and Cadbury cakes which are the market leaders in branded cake in Australia, both delivered double-digit sales growth compared to last year.Now one of the key markets we're looking to expand the business in is North America. And we've previously mentioned that we've been running the trial to Mr Kipling in Canada, and that's given us some really promising results. We're making some tweaks to the model based on what we've learned. And then we'll move to a full national rollout in the second half of this financial year.And then in the U.S.A., it's clearly a much bigger market than Canada. We're continuing to work with our partner, Weston Foods, and preparing a similar launch of Mr Kipling into the U.S. market. And we'll have the benefit, of course, of taking some of the learnings from that Canadian trial forward into our U.S. model. Now another of our strategic growth pillars is taking the brand building capabilities that we demonstrated in our core categories in the U.K. and expanding into new categories. And so we already have 5 -- 4, sorry, full live initiatives in market that take us out of our traditional categories and into what I would describe as logical adjacent categories. And in fact, these have already delivered over GBP 6 million of sales in the last 12 months. [indiscernible] have to say at the early stages of this strategy. And in most cases, this involves utilizing the strong brand equities that we've got available to us in our portfolio and expanding their presence into those adjacent categories. So for example, we've launched Mr Kipling and Cadbury into baking mixes, some very logical extensions [indiscernible] leading cake brands in cake baking mixes as well. We've also introduced a range of Rubs and Marinades under the Oxo brand. And we brought Cape Herb & Spice to market. So again, it's a whitespace category for us in the U.K. And there are further initiatives in the pipeline for the second half of the year. And that also includes a significant expansion in our plant-based offerings. And I'd now just like to touch quickly on non-branded sales. So overall, revenues were 10.9% lower than 2 years ago, there were a few moving parts going on in here. So in the Grocery business, sales were down 10.1% compared to 2 years ago. And that was due to decline in our business-to-business volumes that supply out-of-home eating. So unsurprisingly, that's down versus 2 years ago, but promisingly now starting to recover versus a year ago.I should also point out that this was partially offset by stronger demand for the non-branded grocery products that we sell into our retail customers, which, in fact, were up just over 10% over the same time period. And then in Sweet Treats non-branded sales were down 14.9%. And that's due to the rollover impact of low-margin contract exits, which were, you might remember, decisions that we took last year. So with that being a review of the first quarter's trading, I will pass over now to Duncan to cover the refinancing that we completed in the quarter.

[Duncan Leggett, CFO & Director]

Thanks, Alex, and good morning, everyone. So just a reminder, when we announced our full year results back in May, we announced the new revolving credit facility at GBP 175 million, with the new refreshed bank group, which we think is the best place to support us through the next phase of our strategy. That matures in 2024, and it's got 2 value extension options beyond that. We also announced placement of a new bond. The process is really strong. And actually -- we actually chose to upsize the size of the bond to GBP 330 million. And following [indiscernible] 2 upgrades from credit rating agencies in 9 months, which is a really strong recognition of our progress and our strong financial results. We priced them at 3.5%, which we think was a great result and one frankly that we're very pleased with. So this replaced the GBP 300 million of fixed rate notes, which were priced at 6.25%, so significant improvement on interest. And the bond rebalancing together with the retiring of the GBP 520 million of the GBP 210 million floating rate notes will reduce our interest cost by nearly half compared to 2 years ago. And this forms a key part of our expectations for adjusted PBT this year. With that brief overview, I'll hand back to Alex to wrap up.

[Alexander Whitehouse, CEO & Director]

Thank you, Duncan. And so to wrap up, really, we've made a very encouraging start to the year, particularly in our branded business. And I will also say now that quarter 2 is also off to a good start. So looking forward to the rest of the year, and as you'd expect, we'll be bringing further new products to markets, and as last year, supporting in total 6 of our key brands with advertising in the U.K., along with Mr Kipling and Bisto in Ireland. And we'll also continue to focus on building our overseas businesses and expanding our U.K. presence into new categories.So I think given the encouraging start to the year, the strong plans that we know we put in place, and as Duncan mentioned, the significantly lower interest costs compared to last year, that means that we're now seeing just PBT at the top end of our expectations for this financial year. And so thank you for your time. I'll now pass back to the operator, and we'd be very happy to take your questions.

[Operator]

[Operator Instructions] And your first question comes from the line of Charles Hall from Peel Hunt.

[Charles Hall, Head of Research]

Obviously, a really good start to the year with that 6.3% growth. Does that give you some confidence for the run rate for the remainder of the year? And is that sort of a good target level of growth that you might expect as we go through the quarters? That's the first question. And secondly, obviously, there's much more chat about inflation in the market as well as labor shortages. Do you want to just give your experience to date? And how that might be impacting on margins or otherwise?

[Alexander Whitehouse, CEO & Director]

Yes, sure. Thanks, Charles. So look, I think run rate, yes, we're really pleased to have seen -- this is obviously a transitionary quarter wasn't it, people returning to out of home eating and just wanting to see how that settles down in the quarter. It played out pretty much exactly as we modeled, more of a little better as you've seen in the sense that we came out at the top end of where we expect it to be. So that's what's leaving us in a context for the rest of the year. I think specifically looking at quarter 2, given we've seen the start of that, I would say that we would expect quarter 2 trading to be in that same 5% to 7% range that we gave guidance for Q1. That's as far as I probably want to look out at this moment. In terms of inflation, we're in a very similar position to we were when we last talked about this at the interim. I think we're seeing low single to mid-single-digit input cost inflation. And that's in line with our expectations coming into the financial year. And so as a consequence, our plans that we put in place for the year are dealing with that. So it's a combination of 3 things really: hedging and price increases that we already put through to the market at the beginning of the calendar year, and then internal cost-saving measures. So I would say there's no real new news there for us, and we're quite comfortable that we've got it covered.

[Charles Hall, Head of Research]

That's helpful. And just sticking on the sales line. Obviously, you gained share in every category last -- in the quarter and last year. So that's been really impressive. And maybe that was a bit helped by the pandemic and focus on the leading brands. Do you want to just comment on what's happening now with range reviews happening new product launches? Is that meaning that you'll actually be able to grow on your existing position or may -- you have to give up a bit of shelf space to new competitors?

[Alexander Whitehouse, CEO & Director]

Thanks. Well, I think the first thing to say, I'll reiterate one of the comments I made earlier is that range reviews are happening now. We're very happy with the outcomes that we're seeing. They're very positive for us. And I think that's in 2 respects. One is the sort of new product pipeline that we built up during last year, not all of which, maybe it's a market for the pandemic reason that we talked about. And of course, this year's new products are all now going out the door and landing. And we seem to be doing very well out of that in terms of initial distribution. And then also, as retailers look to optimize their range, we tend to be net beneficiaries of that. So as just stated, given the best-selling SKUs in the category in order to make sure that they don't run out of stock on a heavily choked Saturday afternoon, then that often means that more shelf space goes to our brands because often we're the leader in the [indiscernible] and we often have the best selling SKUs. So net-net, we come out of these things, and we are going now in a positive position.

[Operator]

And your next question comes from the line of Martin Deboo from Jefferies.

[Martin John Deboo, Equity Analyst]

Martin Deboo, Jefferies. I have similar questions to Charles. So I won't repeat them. Let me answer another -- let me ask another one which is much more general. Trading is going well. So you've given us the luxury of just sort of looking a bit longer term. With the cash flow envelope now so much more relaxed, if I could use that word, obviously, we've all pushed you hard on what you're going to do on M&A, and I'm not going to repeat that this morning. But another potential avenue is, are there any bigger scale capital projects you would now be tempted to undertake that will be transformational to the business either in top line or bottom line? In other words, organic expansion rather than a more obvious one of M&A. Because the problem going back 5 years was you were just so cash constrained, you could only accept short payback projects. Is that thinking changing and evolving?

[Alexander Whitehouse, CEO & Director]

I mean, it is not. I think one of the key things is -- for us is actually investing back into our manufacturing infrastructure. So we run a pretty tight ship when it comes to capital investment [ back in ] infrastructure. And every year, we sit and look at a list of projects which go across 3 buckets really. So one is investing in the new capabilities for new products because obviously new products are the life of our growth strategy, infrastructure maintenance, and then also cost reduction and efficiency improvement. And I think what's interesting on -- particularly on the cost reduction and stroke efficiency improvement is that for each of our manufacturing sites, we look down the list and then draw a line. And the line is driven really where the -- where our cash and capital envelope has allowed us to do it as opposed to where the paybacks are attracted. So what it means ultimately is that we can go further down the list. I don't know if Duncan, you want to talk more about capital allocation.

[Duncan Leggett, CFO & Director]

Well, yes, I mean, obviously, CapEx is a big part of that market, as you rightly point out, and as we've talked about before, obviously, dividend plans being competitive and obviously bolt-on M&A, which we look forward to sharing more thoughts on as we progress down the line. But I think Alex's point on CapEx is a very good one. And I guess to your point, are there any big transformation run? I think it's very much moving further down project that we've already got and that's quite some interesting technology around making [indiscernible] that are also on the table as part of that.

[Operator]

And your next question comes from the line of Nicola Mallard from Investec.

[Nicola Victoria Mallard, Consumer Analyst]

A couple of questions really around labor, and sort of Charles has touched on it and you covered it off with a general inflation comment. But obviously, the pandemic, as they're now calling it, is that an issue for you? I know you're less labor-intensive than some of our companies that we follow, so that's one. But also, I suppose, with COVID costs, I mean, are you now starting to take some of those additional practices and costs out to the factory? Or are you going to wait until later in the year?

[Alexander Whitehouse, CEO & Director]

Nicola, thank you for that. Actually, yes. So labor, I think, particularly with reference to the pandemic, we, of course, have seen an increase in the number of people self-isolating over the last few weeks just since everybody has. To be honest, it's tailed off a bit in the last week. So we have seen rates actually fall slightly in the last week. But we're obviously quite hardened by the announcement from the government this morning which does look as though there will be some room for -- to make some changes there. But absences is certainly well within what we saw last year, and therefore, well within our proven capability to manage it. So it's certainly not prone to the specific issue. But as I say, we're quite -- we're welcoming the news from this morning. In terms of COVID costs, so I think -- if we talk about measures, so the distancing measures, the hygiene measures everything that we put in place last year, they all remain. And we've made no changes, and we've got no immediate plans to make any changes, and that's because we still think it's the right thing to do to keep our public safe and also from a business continuity point of view. In terms of costs, the biggest cost for us last year was essentially the labor with absence. And absence levels are, as I said, below a year ago, and we expect them to reduce ultimately as we go through the year. So that obviously is therefore a net reduction versus year ago in that respect.

[Operator]

And your next question comes from the line of Doriana Russo from HSBC.

[Doriana Russo, Analyst]

I just wanted to go back to your comments on current trading for Q2. You said that we're trending in the same direction as Q1, so I mean being at plus 6% year-on-year. I was wondering if you can make any comment on whether during the course of Q1, you've seen any changes versus 2 years ago. So have you observed a consistent 6% increase or is that changing, especially since the out-of-home trade channel is completely reopened? And my second question goes back to your new product launches. You said that there was an acceleration this year versus last year. So can you give us a sense of how much sales from new products have been sold this year versus 2 years ago, please?

[Alexander Whitehouse, CEO & Director]

Thank you. Yes. So I mean if we look at the shape of Q1, I mean clearly, we did see people starting to return to eating out of home. But it did happen quite quickly. And I think once restrictions were removed, I mean the people were pretty desperate to get out and about. So I think you can think about the implications of that. But frankly, I'd say the fluctuations across the quarter were pretty small. But obviously, we don't release individual numbers. But certainly, what we are saying is that we're comfortable with the run rate. And that's why we're saying that we expect to be in the same 5% to 6% range for Q2. In terms of new products, so on a quarterly basis, it's not a number we would normally talk about. But certainly, the ratio of both sales from new products is -- really picked up very strongly in quarter 1. And as I said, it's ahead of where we ended last year. And it's actually ahead of where we ended the year before as well, which -- pre-pandemic. So we're really very pleased with the direction of travel there. And as I say, I think it's largely linked to the fact that those range reviews are now happening. So we would -- we're expecting to make good progress on our sales from new products this year.

[Operator]

And your next question comes from the line of Darren Shirley from Shore Capital.

[Darren Shirley, Research Analyst]

A couple for me, if you don't mind. Firstly, on the pension. I think we're now 15 months away now from sort of your pension announcement in April last year. I mean, is there any color you can give us on sort of progress? Can you confirm that you're sort of broadly on track with the guidance that you gave at that time? And then are there any sort of staging posts we should be looking for over the next sort of 12 to 18 months in that process? And then another one, just on SKUs. I mean, obviously, when the COVID hit last year, we've seen a lot of SKU rationalization. Basically, retailers insurant products were on the shelf. That would have brought some efficiencies, I would have thought. I mean, where are we now in terms of sort of SKU counts, maybe relative to sort of pre-COVID levels? Are we getting back to that sort of ranges?

[Alexander Whitehouse, CEO & Director]

So I'm going to hand it to Duncan to talk about pensions. It's especially his subject. And then I'll now pick up on the SKU question.

[Duncan Leggett, CFO & Director]

Thank you. So I mean, on pensions, there's a lot of good progress being made by the trustees. And they're doing lots of good things behind the scenes, ranging from sort of opportunistic [indiscernible] you might have read about in our annual report, which reduces membership data from the Premier Foods scheme. And also changes to the Premier Foods scheme investment strategies, which would always going to happen once the team that's actually ran the RHM scheme got there and around all 3 schemes. So there's been changes to the Premier Foods investment strategy. And in turn, we are targeting higher returns from those outlets as a result. So as I say, a lot of good things coming. In terms of staging post, and I think the main one is the triannual valuation next year, throughout April 2022. And there is a more technical valuation in the company through [indiscernible] going on at the moment. So that's March 21, that is a requirement of the merger, and we'll know more about that in the autumn, but the main staging post will be next year. So I think in summary there's a lot of good progress being made. Nothing to suggest that what we said previously will change. But obviously, with pensions, as we know, there's a lot of factors outside of our control that we can't then have a perfect visibility of hence putting in the sort of low, medium and high case that we announced it last year.

[Alexander Whitehouse, CEO & Director]

And so moving on SKU count. So we -- you're absolutely right. When we were in the midst of quarter 1 and into quarter 2 last year, where it was essentially all hands on deck from both us and the retailers, just keeping core on the shelf, we did, in conjunction with our retailers, what we call suspend some of our more periphery SKUs, if you like, to make sure the main ones were in stock. But actually, that reversed very quickly. So we never -- they were never taken out of the range. They were only sort of suspended. And so quite quickly, I would say, back end of quarter 2 last year, those products all sort of came back into distribution. So they were never really removed from the range. They were just sort of put on hold, if that makes sense.

[Operator]

And your next question comes from the line of Clive Black from Shore Capital Markets.

[Clive W. Black, Head of Research]

Well done on your Q1. Just a couple of quick ones for me. Firstly, can you give an indication of how you see the cost of advertising at the moment? Is that something that is becoming a little bit more challenging, now we're out of the constraints of lockdown 1 in particular? And secondly, also just any indications where sustainability fits in with your Q2 H2 plan for this year, please?

[Alexander Whitehouse, CEO & Director]

Yes. Sure, Clive. So cost of advertising. I mean the first thing you'll be very well aware that as we went through particularly the first half of last year, cost of advertising, it was very low. And we took full advantage of that, and we actually increased our investment levels, if you remember. And we essentially got a double benefit because the cost was lower and the number of people watching at home was not higher, because frankly, there was [indiscernible]. So that benefit really was mainly in the first half of last year, a bit into the second. And we saw advertising costs normalize really at the back end of last year, and that's sort of where we are now really. So no real [indiscernible], I don't think, in that area. Moving on to sustainability, it's such a big question. So there are a number of key areas there. I mean we've got -- as you'll be aware, it's in the annual report, we've got 5-pillar sustainability strategy, and we continue to work on all those pillars. In the interest of time, I'll not go through them all now and all the different things we're doing. But key for us are things like packaging, focusing on encouraging consumers to eat more healthily. We've seen that in our NPD plans, bringing more plant-based options, more low-salt, low-sugar, low-fat products to market. And that continues to be the key focus within our NPD pipeline. And then there are a number of other things we're doing in terms of reducing our environmental footprint, et cetera. But it would take a long time to go through them all, Clive.

[Clive W. Black, Head of Research]

Okay. I understand. I'm just wondering was there any specific initiatives that we should be looking out for in the next sort of 3 to 9 months? In that respect, just by way of a supplementary, did you have any particularly strong views on [indiscernible] Weston Foods strategy [indiscernible] Premier Foods?

[Alexander Whitehouse, CEO & Director]

Well, I think we've been clear. For a long time, we fundamentally support the government's intent to encourage people to eat more healthily. And we think that as a major U.K. food manufacturer, we've got an important moral responsibility to help deliver that. But I'd also point out to everybody on the call, this is also a commercial opportunity for us. Because the success of the business over the last few years has been fundamentally based on the fact that we listen to our consumers and we provide new products that are in line with where they're going, their cooking and eating trends. And the single biggest trend in cooking and eating is people trying to stay more healthily. So by fulfilling our moral obligation to help people, we're also actually delivering commercial benefits to the business because that's what the consumer wants to hear from us. So it remains absolutely center stage for us as we go forward.

[Operator]

And your next question comes from the line of [indiscernible].

[Unknown Attendee]

I just got 2 questions. First one is, is there any progress on the bolt-on acquisitions? Rumors are that Unilever are looking to offload some savory brands. Is Premier looking to acquire say, the Oxo -- the rights to the Oxo brand in other countries, such as Canada and South Africa, if this is available? And the second question is, what is the cost of the refinancing? Was it in line with the estimates? Or was there an improvement in the cost?

[Alexander Whitehouse, CEO & Director]

Sorry, can I just check which institution do you represent?

[Unknown Attendee]

Sorry, yes. Private investor.

[Alexander Whitehouse, CEO & Director]

Okay. Right. So in terms of bolt-on acquisition, I think we've been quite clear on this one. I mean the good news is that we are in a financial position that should the right bolt-on acquisition come along, then it's now something that we can entertain, which is clearly different from where we've been historically. There's nothing specific that I'm really wanting to talk about today. But I will remind everybody that, fundamentally, we see ourselves as brand builders. Our core skill set is in about how we build brands and generate value from brands. That's how we've made the business successful and turned it around. And our core focus is on delivering branded growth from our existing core business, from expanding into new categories, which I talked about today and from expanding overseas, all deploying the same brand-based principles. Now if it makes sense to acquire a brand which gave us presence in an additional category and particularly one that we certainly couldn't do organically, then that would make a lot of sense. But there's nothing specific that I'm drawing on attention to at the moment. Duncan, do you want to talk about cost of refi?

[Duncan Leggett, CFO & Director]

Yes. I mean we set out projected refinancing costs in our guidance for the year at the prelims, and there's nothing to call out in terms of major differences to that.

[Operator]

And the next question comes from the line of Doriana Russo from HSBC.

[Doriana Russo, Analyst]

Yes. Sorry, me again. I just have a follow-up question. First of all, I wanted to understand a little bit better, what's your current take on your international strategy? There has been some mentioning earlier on in the call in terms of moving into different categories. And I was wondering whether this is going to be like the wider strategy that you're going to look at in the future. And secondly, a question on the competitive environment that you've seen post pandemic. As the market reopened, have you seen any of your previous player moving more aggressively into the categories or out of the categories? And how are you looking at the private label participation within some of your key areas? If you can make a comment on those ones, please.

[Alexander Whitehouse, CEO & Director]

Yes, sure. No problem. So our international strategy has not changed since we went through it at prelims, and we're continuing to vigorously execute that. I think your question might have been specifically about new categories overseas. I would point us to the fact that we would focus always first on going into categories where we've already got expertise from the U.K. Because if you think about it, categories we know how they work. We know the dynamics. We've already got the NPD pipeline. So our primary focus is taking our existing brand of existing products into our focus list of new markets. And essentially, as I said earlier, using the same skills that we've got in brand building. But of course, you then have to adapt to the local market environment. So think about promotional techniques will change a little bit and price points will be different, et cetera. So you have to adapt to the local environment. But the fundamental way in which one builds brands and generate brand value are very universal. [indiscernible] look back to the skill set that we're deploying. In terms of competition post pandemic, I would say no real challenge, to be honest with you. I mean, it's -- most of our categories were -- there are lot of core categories, we're strong market leaders, and that always is a great advantage, of course. But -- and then I think specifically, private label, I would say the dynamics are pretty much as they've been for the last few years. I think the key thing that brand owners always have to remember is you always need to stay ahead of private label, that means you've got to innovate, you've got to be more reaching with where the consumers need to go in. And you've got to make sure that you're bringing a product that offers genuine benefits and value to the consumer. And if you do that, you'll be successful. But I'll say that's fundamentally core to our model and fundamentally core to also the business successful over the last 2 or 3 years. So I would say, no change.

[Doriana Russo, Analyst]

Okay. Sorry. But coming back to the international strategy. Then did I understand correctly that you were opportunistically getting into cake baking and other adjacent categories that perhaps are not core for you in the U.K.?

[Alexander Whitehouse, CEO & Director]

Yes, that's correct.

[Doriana Russo, Analyst]

Okay. And was that just a business opportunity? Or is that more broadly the way you want to go about it in the future?

[Alexander Whitehouse, CEO & Director]

I think this is as we set out in prelims. So one of our core strategies is to expand into logical adjacent categories, in particular, where our existing brands have got relevant brand equity for consumers. So the example I gave earlier, it makes perfect sense, doesn't it, if you've got the leading brand of cake in the U.K. to launch a home baking cake mix because it's instantly credible to the consumer. So that's a very good example of where an adjacent category expansion works really well. Likewise, we've launched Oxo Rubs and Marinades, which gives us exposure to, again, another category, and then in particular, the barbecue season. And again, Oxo is instantly credible when it comes to flavoring and seasoning product that are seasoning related. So clearly, that expansion makes perfect sense in terms of consumer accessibility. And so those are the things that we will look to do. Occasionally, where we think it might be beneficial, as we've done with Cape Herb & Spice, we brought in a new brand, and that's a brand that we're distributing, and that gets us presence in certain sites where we historically have not been present. So again, another example of whitespace where it's all on top for us in terms of growth.

[Doriana Russo, Analyst]

Okay. Excellent. I think I was trying to understand whether you might be doing the reverse, and therefore, if cake baking works internationally, you might bring that in the U.K. likewise with some of the other examples that you have made.

[Alexander Whitehouse, CEO & Director]

Yes. Sure. Well, actually launched that in the U.K. first. So actually coming to the U.K. just over a year ago. It's done very well, and we've now extended it into Ireland. And it's not entirely unreasonable to think we might be selling in other market.

[Operator]

[Operator Instructions] There are no further question at this time. Please continue.

[Alexander Whitehouse, CEO & Director]

Okay. I think that wraps everything up. Everybody, thank you very much for investing in time with us again this morning. And as you see, we're feeling pretty confident along the front foot. We've had a good start. And it's giving us a lot of confidence for the rest of the year. But thanks very much for your time.

[Operator]

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.