May 23, 2012


Cranswick expects more pork exports to Australia and China


Cranswick hopes for increased utilisation of the Chinese pork market, and shipping to Australia, as rising exports aided the meat group to better-than-expected full year results.


The UK processor attributed a "strong recovery" in the October-to-March half, from a period when profits were depressed by strong pig prices, in part to "buoyant export sales, particularly to Far Eastern markets".


Exports, on which the group had enjoyed "strong margins", were "becoming areas of increased focus for the group, both to Europe and further afield", Cranswick said.


Indeed, the company was hoping to exploit the opening up of the Chinese pork market, the world's biggest, to British exports as unveiled on Friday.


"Cranswick does already export to China, but through Hong Kong and Singapore," a spokesman said.


"Now they are looking to export direct," following a shipment already announced to China by Tulip, the UK's biggest pork producer.


Furthermore, Cranswick, for which the US ribs market has been an export staple, was looking to expand to shipping to Australia too, but awaiting Canberra approval.


"The company has got a lot of contacts out there who used to work for the big retail multiples over here, but gone out to Australia," the spokesman said.


Australia, while a major beef exporter, is to import a record 185,000 tonnes of pork in 2012 as it seeks to satisfy growing consumption, estimated at an all-time high of 495,000 tonnes, according to USDA.


The improvement reflected a 39% jump in bacon sales, besides the growing taste for pork, rather than turkey, as a Christmas roast which the group flagged earlier in the year.


The company also revealed that Bernard Hoggarth, who reaches 60 this year, is to stand down in August as chief executive, to be replaced by Adam Couch, who was appointed chief operating officer last year as part of Cranswick's succession planning.


Mr Couch has worked his way up in Cranswick since joining the company 20 years ago as a graduate trainee.


Cranswick's results were termed "solid" by Panmure Gordon analyst Damian McNeela, who restated a "hold" recommendation on the group's shares despite their 14% outperformance of the FTSE All Share index so far this year, and premium rating of 10.7 times for 2012 earnings.


"This premium is warranted given the strength of Cranswick's balance sheet, strong management team and improving earnings profile," Mr McNeela said.


Shore Capital, forecasting that the seasonal rise in UK pig prices will peak below last year's figures, termed Cranswick shares a "core holding".


"Cranswick is well positioned to deliver sustained growth, supported by excellent cash generation, a strong balance sheet and well invested industry leading manufacturing infrastructure" Shore Capital said.


The shares closed 0.8% higher in London.