“The Benson Park acquisition is reported to be ‘progressing as anticipated’, delivering a positive performance in line with expectations,” said Shore Capital analyst Darren Shirley, reporting on Cranswick’s yearly trading statement, highlighting that it was poised to reach sales of £1bn for the first time.
“The ongoing investment in the Humberside facility, which will effectively double capacity, is on-track for commissioning in autumn 2015.”
In addition, Cranswick had managed to keep its net debt at about the same level as it was in March 2014, despite pumping £17.7M into Benson Park, he said.
Convenience and foodservice
Benson Park’s food-to-go multi-channel convenience and foodservice business had lifted Cranswick’s activities in the sandwich and catering sectors, which are key markets for the subsidiary, said Shirley. It snapped up the business in October last year.
Cranswick made capital investments of £25M over the year, feeding into total capital expenditure of £227M over the past 10 years. Notable projects completed were the extension of its Milton Keynes cooked facility. That had added “substantial capacity”, while improving carcass and slicing yields, the business claimed.
It also made a major upgrade to the chilling capability in its Norfolk primary processing facility, which has both lowered energy costs and improved carcass yields.
Fresh pork
Fresh pork had been the core driver of Cranswick’s sales over the past year, with Shirley estimating strong double-digit volume growth in that area.
The company’s Continental Products division had also performed well, continuing its high single-digit growth from Cranswick’s third financial quarter, said Shirley. “We believe sausage and bacon both had a good period, though cooked meats was more subdued after a relatively slow start in the early weeks of 2015.
“Pastry continues to grow very strongly, albeit from a still small base, and with early operational teething problems now worked through, we expect the site to have made a consistently positive contribution through H2 2015 [the second half of its 2015 financial year].”
Export sales also remained robust, with sales to Far Eastern markets particularly promising, said Shirley.
Choppy waters
Despite choppy waters ahead in the form of continued food deflation and the high price of UK pig meat relative to other EU countries, he forecast solid growth for Cranswick throughout the next financial year.
Prices were stabilising, he said, and it was likely there would be upward pressure on EU competitors’ prices, rather continued downward pressure on the UK.
In the year to March 31, Cranswick reported underlying volumes up 4%, leading to a 1% increase in underlying sales.