May 22, 2013

Cranswick's sales, profits rise despite soaring pig, feed prices




Despite record pig and feed prices, premium pork specialist Cranswick has announced a 7% rise in sales and 8% rise in profits.


The company reported revenues of £875 million (US$1.3 billion) for the 12 months to March 31, 2013, compared with £821 million (US$1.2 billion) for the same period in 2012, and adjusted pre-tax profit of £49.3 million (US$75 million) compared with £45.6 million (US$69 million) in 2012.


The company managed to increase sausage sales by 10% on-year despite the poor summer in 2012, while fresh pork sales were up by 5%. Meanwhile, sales of its "premium hand-cured, air-dried bacon" increased by 13% on-year, and cooked meats were up by 11%.


CEO Adam Couch said the company had performed well during a challenging 12 months, during which rising input costs drove pig prices to record highs. Cranswick had managed higher pig prices thanks to operational efficiencies it had made to its infrastructure over the past five years, investing £125 million (US$189 million) in improving and expanding its processing facilities, Couch said. "This investment has delivered first-class operations with sufficient headroom to meet the demands of the group's customers at peak times whilst improving operating efficiencies and maintaining the quality standards expected by the company's stakeholders."


He added the horsemeat scandal had made robust supply chains more important than ever, highlighting Cranswick's recent move towards greater supply chain integration with the acquisition of pig breeder East Anglian Pigs.


Shore Capital said Cranswick's performance was ahead of expectations and said it estimated the company's organic revenue growth during the second half of its financial year was close to double digit. "In a UK food market still suffering from falling volumes, we view this as an outstanding performance".


House broker Investec said Cranswick's outlook for the 12 months to March 2014 looked "solid", with revenue expected to increase to £940 million (US$1.4 billion). It increased its forecast for profit before tax by 1% from £52.5 million (US$79.5 million) to £52.9 million (US$80 million) for the period, upped its price target from £11.80 (US$17.87) to £11.90 (US$18) for the company and reiterated its 'buy' recommendation.


Cranswick also announced today First Milk CEO Kate Allum would join its board as a non-executive director from July. A former head of European supply chain for McDonald's, Allum would bring "operational experience of international food markets and broadens the expertise and experience within the board," Chairman Martin Davey said.


Davey also said he would move to a part-time role as chairman from September 1, having established the new executive team around Couch, who become CEO last August.