Premier Foods Group PLC (LON:PFD) delivered a double helping of good news as sales soared due to stockpiling ahead of the lockdown and it agreed a pensions deficit settlement.
The Mr Kipling, Ambrosia and Sharwoods group saw UK sales soar 15.1% in March as shoppers cleared shelves ahead of the coronavirus clampdown.
Sales for the year rose by 3.6%, but increased by 7.3% in the final quarter and by 10.5% in March alone.
As a result, profits for the year just ended will now be at the top end of market expectations, said the FTSE All-Share member.
Under the terms of the pension deal, all three schemes will be merged under one trust, with the RHM scheme to be sold to a specialist insurance group.
That sale is expected to result in a surplus that can be transferred to the other two schemes and reduce their deficits.
Premier estimates that the deficit will reduce to between £175-185mln from £300-320mln following completion with an annual saving to the company of £4mln from 2020/21.
Colin Day, chairman, said: "The segregated merger of the company's pensions schemes we are announcing today represents a ground-breaking agreement which is set to unlock benefits and value for all stakeholders in the company, leveraging the strength of the RHM scheme and substantially improving the position of the Premier Foods schemes.
“With a buyout of the RHM scheme getting progressively closer, any resulting surplus would be transferred to the remaining schemes and therefore result in significantly reduced pension deficit cash contributions by the company in future years."