Cranswick and Premier Foods: First quarter results are in
In the 13 weeks to 26 June 2021, meat processor Cranswick reported a 9.6% growth in sales compared with the same period last year. Volume grew 7.7% due to strong retail demand and increased sales from the company’s Eye poultry facility.
Strong market prices meant Cranswick’s Far East export sales were ahead of the same quarter last year, despite the fact that the export license at its Norfolk primary processing facility remained suspended.
Commenting on the results, chief executive Adam Couch said: “We have made a positive start to the year. Our capital investment programme remains firmly on track as we build the platform to deliver our long-term growth strategy and we continue to make meaningful progress in delivering our Group-wide 'Second Nature' sustainability strategy.
Ensuring availability
“We also continue to support our customers by delivering excellent service levels to ensure full availability of our products.”
Investment continued across all parts of Cranswick’s business, including a capacity uplift from 1.1m to 1.4m birds per week at the Eye poultry facility and a new £20m cooked bacon facility in Hull. A further £5m would be spent at the Hull facility over the coming months to add additional capacity and capability, the business reported.
Shore Capital analyst Clive Black said Cranswick’s strong balance sheet supported its investment plans and provided the manufacturer with considerable flexibility, control and opportunity.
“More broadly, the Cranswick’s strategic fuel tank appears as large and as full as ever, with the aforementioned balance sheet a strong enabler of much more to come in future years," Black added. "Cranswick is a top-class business that merits premium multiples.”
COVID-19 troubles
Elsewhere, the circumstances of the first COVID-19 lockdown in the UK saw sales dip for Premier Foods in the 13 weeks ended 3 July 2021, compared with the same period last year.
Total grocery sales were down 17.9%, while total group sales fell 13.2%. Premier's sweet treats portfolio fared better with an increase of 1.4% to sales compared with the same period in 2020.
Despite the setback caused by the pandemic, the company reported a boost in sales across all sectors compared with the same period two years prior. Revenue in its grocery business was up 8.2%, sweat treats up 2% and total group sales up 6.3%.
Premier attributed much of its sales growth over the past two years to its collection of branded products. Sharwoods had delivered two year sales growth of 25%, while Nissin noodles grew 160%.
‘Encouraging start to the year’
Alex Whitehouse, Premier chief executive, said: “We have made a very encouraging start to the year, with quarter one sales at the top end of our expectations, as our brands again benefited from the introduction of new products and continued marketing investment.
“With our continued strong trading momentum and the substantially lower coupon of the new fixed rate notes at 3.5%, we now expect to deliver adjusted profit before tax at the top end of our expectations for FY21/22.”
Alex Smith, senior analyst at Third Bridge, described Premier as a business with momentum on growth where they needed it.
“Our experts say chief executive Alex Whitehouse has done a good job with the turnaround,” he added. “They see a focus and increased investment on core categories such as cooking sauces, accompaniments, and ambient cakes, and to a smaller extent quick meals, flavourings and seasonings. Lesser brands, like Marvel, Lyons, and Smash have been de-prioritised.”
