- Demand resilient in core product categories
- Cost inflation ‘starting to slow’
- Progress in pet products ahead of Pets at Home launch
Shares in Cranswick (CWK) fattened up 2.5% to a 12-month high of £34.28 after the gourmet sausage, pork and poultry producer upgraded its year-to-March 2024 outlook on the back of a strong first quarter trading, with volume growth returning across many categories.
Despite the cost-of-living pressures facing consumers, Cranswick said momentum had continued into the second quarter with demand remaining resilient in core UK categories as hard-pressed shoppers continue to recognise ‘the quality, value and versatility’ of its pork and poultry products.
There was also relief as the Hull-headquartered food producer insisted cost inflation continued to be proactively managed and mitigated through tight cost control and price increases and that the rate of inflation was ‘now starting to slow’.
NOURISHING QUARTER
Cranswick’s sales grew 14.7% year-on-year in the first quarter to 24 June, with UK revenues across all four food product categories ahead underpinned by positive volume momentum in the company’s fresh pork, convenience and gourmet product categories.
However, poultry volumes were modestly down year-on-year year with lower cooked poultry volumes partly offset by strong growth in breaded poultry.
And Cranswick’s export sales were down with Far East volumes remaining subdued due to the seasonal demand slowdown in China.
CRANSWICK’S IN CONTROL
A dividend champion which supplies the retail and food service channels, Cranswick said: ‘Accelerated investment in automation projects and a relentless focus on delivering cost saving initiatives, allied to the affordability and value for money of our core pork and poultry categories, continue to drive our competitive advantage.’
And while UK pig prices rose 28% in the period reflecting the sharp increase in the cost of production and a shrinking UK pig herd, Cranswick’s self-sufficiency in pork is roughly 50% and the FTSE 250 company expects further consolidation given UK pork production pressures.
There was also positive news on Cranswick’s pet products business, which continues to make strategic progress with the £10 million capital investment programme progressing to plan and the stock build underway ahead of the launch into retailer Pets at Home (PETS) later in the year.
THE SHORE CAPITAL VIEW
Shore Capital increased its full-year 2024 pre-tax profit forecast by 4% to £154 million, implying year-on-year growth of 10%, and flagged that if trading remained strong there was ‘further upgrade potential’.
The house broker regards Cranswick as ‘a world-class operator in the UK food system, with industry-leading capability and manufacturing facilities that have been cultivated by a high-quality management team and multiple years of capital investment’.
Shore Capital believes Cranswick’s growth opportunities are ‘broad, from the core pork activities to the fast-growth continental foods category, the still immature poultry activities and the nascent presence in a vertically integrated pet food business.’
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