Cranswick profits rise 38% after ‘superior growth’

29-Nov-2016 - Last updated on 29-Nov-2016 at 09:51 GMT

Cranswick reported a 38% rise in profits before tax

Meat processor Cranswick reported a 38% rise in profits before tax to £40.4M in its half-year statement for the six months to September 30, as it continued its period of “superior growth”, analysts said.

Revenue increased 15.9% to £580.8M, compared with the same period last year, and earnings per share rose 30.8% to 62.5p. Sales were boosted by Crown Chicken – a fresh chicken producer that Cranswick bought in April for £39M, Cranswick said.

Cranswick chairman Martin Davey said: “The business performed strongly during the first half of the year. Crown has made a particularly positive contribution to the business, is combining well with the group’s pre-existing poultry activity and is being integrated in-line with plan.

‘Strategically important’

The meat processor said acquiring Crown Chicken was “strategically important”, and helped it to focus on developing “high quality, great tasting, innovative food products, which are ideally suited to the fast-moving food-to-go and convenience formats”.

Revenue from Cranwick’s fresh pork sector increased 3%, driven by strong export growth, it said. Sausage sales were boosted by 16%, so double the amount of pigs in blankets would be made this year, compared with the last year, in the run-up to Christmas.

Export volumes grew by 23% during the six months, Cranswick reported. Volume growth in its Far Eastern and US markets grew by 37% and 11% respectively, while sales in all other international markets fell 4%.

Pork processing would be improved further

Cranswick half-year results – at a glance

Revenue up 15.9% to £580.1M
Profit before tax up 38.4% to £40.4M
Sales boosted after Crown Chicken acquisition

Cranswick said its UK pork processing capabilities would be improved further, as it acquired Dunbia Ballymena on November 16. The acquisition came after the end of the reporting period, so was not included in its half-year results.

“Cranswick has made further commercial and strategic progress during the period whilst working closely with customers to maintain its focus on service, quality and innovation in delivering appealing and competitively priced products to the consumer,” Davey said.

“The board believes that Cranswick remains well positioned to deliver our expectations for the current financial year and also to meet the challenges that may arise as it continues its successful long-term development”.

What the analysts say about Cranswick

Shore Capital analysts Darren Shirley and Clive Black said: “Cranswick’s unaudited results for the six months ended September 30 have confirmed a period of superior growth. Looking into [the third-quarter] and beyond, we see scope for sales growth to accelerate further as deflationary headwinds ease due to the strengthening UK pig price.”