Cranswick lifts profit guidance but flags economic uncertainty
Cranswick lifts earnings expectations, but signals economic uncertainty
- Cranswick reported a 14.7% increase in sales for the 13 weeks ended June 24
- All four of the company’s major food product segments experienced strong growth
- The company has been a notable winner of the pandemic thanks to more home-cooked meals
Cranswick has raised full-year expectations after a solid performance in the first quarter, but the food producer expressed caution about current economic conditions.
The Yorkshire-based company reported a 14.7 percent year-on-year sales increase for the 13 weeks ended June 24 on the back of stronger results across all four core food segments.
Growth was driven by rising volumes of breaded poultry, fresh pork, ready-to-eat and gourmet products, offsetting a decline in cooked poultry volumes and weaker exports due to declining seasonal demand in China.
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Demand in the group’s core categories has remained strong over the past month, despite cost-of-living pressures facing UK consumers.
As a result, the full-year outlook for the FTSE 250 company is now expected to beat previous expectations.
Cranswick chief executive Adam Couch said: ‘We started the year strong and delivered another quarter of growth in which we continued to support our customers by providing excellent service levels to ensure full availability of our products.’
Cranswick continued to suffer from inflation, but the group noted that the pace of cost increases had begun to slow, supported by investments in automation and other efficiency measures.
Higher costs have hit the company since the Russian invasion of Ukraine, driving food and fuel prices up significantly.
Many independent pig producers have scaled back or even stopped production altogether due to rising feed costs.
The resulting fall in the size of the UK pig herd caused the average price of pigs to rise by 28 per cent during the quarter.
Cranswick said it was investing in expanding its herd ‘to ensure we have the required quantity and quality of pigs to meet our customers’ requirements’.
In addition, the company is developing its cooked poultry site to increase cooking and roasting capacity and is committing £10m capital investment to its pet products division.
In January 2022, the group acquired Lincolnshire-based Grove Pet Foods, a producer of dry dog food and owner of the Vitalin and Alpha food brands.
Couch added, “Our continued positive progress reflects the substantial continued investment in our asset base and the quality and competence of our colleagues across the company.”
Cranswick Shares were up 0.9 per cent late Monday afternoon at £33.74, though their value has shrunk by about a fifth from their mid-2021 peak.
The company has been a notable winner of the pandemic, as the forced closure of catering establishments due to Covid-related restrictions has led Britons to cook more meals at home.