- Strong first half with sales up 12% and pre-tax profit rising 24%
- Adjusted operating margin improves to 6.8%
- Full year pre-tax profit upgraded to top of market forecasts
Premium food supplier Cranswick (CWK) was one of the top gainers in the mid-cap FTSE 250 index on Tuesday, rising 2% to £37 after delivering tasty first half results and raising full year guidance.
The shares notched-up a new 12-month high and have gained around 20% in 2023 supported by persistent upward analyst earnings revisions.
HOW DID CRANSWICK PERFORM?
Revenues for the 26 weeks to 23 September increased 12.3% to £1.25 billion driven by ‘effective inflation recovery’ and ‘resilient’ volume growth across four UK food categories.
Group pre-tax profit jumped 23.6% to £81.6 million, which Shore Capital notes is around 7% higher than its own estimates, prompting a 5% upgrade to full year forecasts.
Adjusted operating margin increased to 6.8% from 6.1% in the same period in 2022, which Cranswick said reflected a positive contribution from ‘rapidly expanding’ pig farming operations.
A tight control of costs and ‘robust’ returns from effective deployment of capital were also positive contributory factors.
WHAT DID THE COMPANY SAY?
Chief executive Adam Couch commented: ‘Momentum has continued through the start of the third quarter as our customers and the UK consumer continue to appreciate the affordability, value for money and versatility of our core pork and poultry categories.
‘Our continued positive progress is made possible by the substantial ongoing investment in our asset base, expansion of our pig farming operations and the quality and capability of our colleagues across the business.’
Despite being cautious about current market and wider economic conditions the board raised full year guidance to the upper end of current market consensus estimates.
Company-compiled consensus estimates call for adjusted pre-tax profit of between £153.2 million to £160.8 million pounds.
Shore Capital commented: ‘Cranswick has reported a continuation of the strong trading momentum outlined in its Q1 FY24F, with pleasing commentary on ‘trading up’ boding well for the upcoming UK festive period.
‘We see Cranswick’s considerable investment in the UK food supply chain and food security as a major contributor to its margin enhancement.’
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