Shares in food producer Cranswick (CWK) gained 1.3% to £36.78 on Tuesday after the company revealed first half adjusted operating profit grew by 12.3% year-on-year to £69.6 million, on strong like-for-like sales growth.
Growth was driven by a significant 35% uplift in poultry sales following capacity expansion at the Eye facility and a two bolt-on acquisitions in the non-meat convenience category.
Revenues were 6.6% higher to £993.1 million representing 6.4% growth on a like-for-like basis, with corresponding volumes up by 4.1%. Like-for-like sales were 25.5% higher than two years ago demonstrating strong underlying growth across the business.
Management said excellent customer service levels had been maintained despite industry wide labour and supply chain challenges while input inflation was being ‘proactively managed and recovered’.
MARGIN EXPANSION, DEBT REDUCTION
Operating margins increased by 35 basis points to 7% reflecting the revenue uplift and lower Covid-19 related costs as well as a lower contribution from exports to China and the Far East.
Strong cash generation saw net debt excluding lease liabilities fall to £18.6 million from £54.6 million last year while the group secured a new unsecured £250 million lending facility after the period end, providing ‘generous’ headroom. The dividend was increased by 7% to 20p per share.
The company continued to ‘invest at pace’ in projects to increase automation projects to increase efficiencies and support further growth.
FORECASTS UNCHANGED
House broker Shore Capital kept its earnings estimates unchanged noting, ‘challenges remain in the UK supply chain ahead of the key Christmas performance.
However, looking further out the broker said: the group is exceptionally well positioned to drive medium to long profits growth, cash generation and attractive returns.’
