Cranswick ends the year in ‘good style’

In a financial statement accompanying the results, Cranswick reported continued “positive trading” for the year ended  March 31 2016. It also said it had committed unsecured facilities of £120M which “provide comfortable headroom”.

The UK food manufacturer specialised in the processing and supply of fresh pork, sausage, bacon, cooked meats, premium cooked poultry, charcuterie, pastry products and sandwiches. 

Sales volumes 12% up

Positive trading during the final quarter of the financial year resulted in total full-year sales volumes being 12% up on the previous year. 

Full-year underlying sales volumes, increased by 10%, with revenues ahead by 5%, as the group’s customers continued to benefit from lower pork prices.

Sales volumes do not include the contribution from Benson Park, the poultry producer it purchased for £26.3M, before the anniversary of its acquisition on October 22 2015 and sales from the pig breeding, rearing and trading activities.

Export sales also grew strongly in the final quarter, reflecting the ongoing robust demand for pork products in Far Eastern markets, it said.

‘Another robust trading update’

Analysts Clive Black and Darren Shirley from Shore Capital said the UK food producer had issued “another very robust trading update”.

The confirmation of strong volumes saw them “once again” nudge up their forecasts, for the 2016 financial year,  especially with the company outperforming the wider grocery market.   

The analysts noted that the underlying sales of 5% reflected “sustained input cost driven deflation”. But they nudged up their revenue forecast to £1,070M for FY2016. 

The analysts said that deflation was a feature of Cranswick throughout the year, which was reflected in the “significant fall in pig prices in both the UK and across the EU”.

However, as the UK pig price had stabilised in recent weeks, they said there was “growing evidence” that the market had reached the floor in the current UK pig price cycle.

Shore Capital highlighted the volume growth in fresh pork, Benson Park, pastry, bacon, continental foods and cooked meats. But sausages reported a “relatively subdued” performance while sandwiches showed flat volumes.

“Cranswick has the cash flow traits, balance sheet strength and well invested asset base to support its ongoing ambitions across UK retail and foodservice, the UK pork and poultry markets and potentially overseas expansion if the right bolt-on acquisition comes along,” Shore Capital confirmed.