- Strong 1H sales growth +12.4%, like-for-like +10.7%
- Dividend up 3%
- Outlook unchanged despite macro challenges
Premium food producer Cranswick (CWK) delivered strong first half revenue growth of 12.4% to £1.12 billion and like-for-like growth of 10.7%.
The resilient performance in the face of ‘a relentlessly challenging operating environment’ was well received with the shares gaining almost 4% to £32.
Shares in Cranswick are down 15% year-to-date compared with a 4% drop in the FTSE-All Share.
CEO Adan Couch said: ‘Notwithstanding the many challenges that we, our industry and the wider economy face, the strengths of our business, which include our diverse and long-standing customer base, breadth and quality of products and channels, robust financial position and industry leading infrastructure, will support the further development of Cranswick over the longer term.’
RESILIENT PERFORMANCE
Revenue growth primarily reflects a recovery of ‘significant’ and ‘widespread’ cost inflation with all the firm’s categories ahead year-on-year.
The company said Gourmet Products category (comprising Sausage, Bacon, and Pastry) saw strong growth driven by onboarding new customers and the roll-out of products from the new Hull Cooked Bacon facility.
Group adjusted EBIT (earnings before interest) margin declined by 0.88% to 6.1% which reduced year-on-year profit by 1.7% to £68.4 million.
However, Shore Capital analysts noted that group EBIT included a £3.1 million charge for a product recall which is expected to be recovered in the second half. Excluding the charge profit was £71.5 million, equating to modest 2.7% growth.
Adjusted earnings per share fell 5% to 98.6p while the dividend was increased by 3% to 20.6p per share.
Cranswick has increased its dividend by an inflation-busting compound annual growth rate of 11% over the last decade as featured in a recent Shares article.
Shore Capital nudged down 2023 and 2024 pre-tax earnings estimates by 1%-to-2% but noted the shares trade on valuation metrics which are ‘some way below the pre-Covid comparatives’.
