Cranswick reports robust first-quarter performance

Food producer Cranswick reported a robust first-quarter performance in an update on Monday, with a 14.7% increase in revenue year-on-year.

The FTSE 250 company said its core categories experienced resilient demand, with all four food product categories in the UK seeing year-on-year revenue growth, with fresh pork, convenience, and gourmet products showing positive volume momentum.

Poultry volumes were slightly lower compared to the prior year due to decreased cooked poultry volumes, which were partly offset by growth in breaded poultry.

However, Cranswick said export sales faced challenges, particularly in the Far East, where volumes remained subdued due to an expected seasonal slowdown in demand in China.

To tackle cost inflation, Cranswick said it had been proactively managing and mitigating it through tight cost control and ongoing recovery efforts.

While the rate of inflation had started to slow down, the firm said it had accelerated investments in automation projects and maintained a focus on delivering cost-saving initiatives.

Additionally, the affordability and value for money of its core pork and poultry categories had bolstered Cranswick's competitive advantage.

The board said a key factor influencing the industry was the significant contraction of the UK pig herd in response to escalating feed costs following Russia’s invasion of Ukraine last year.

Independent producers had been forced to cut back or cease production entirely, leading to an unprecedented inflationary pressure on pork prices.

The average UK pig price surged by 28% during the quarter compared to the same period last year, and Cranswick said it had responded by investing in and expanding its pig herd, nearing 50% self-sufficiency to ensure a steady supply and maintain quality.

It said it expected further sector consolidation, and was planning to expand its farming capability to secure continuity of supply, emphasise farm-to-fork traceability, and maintain high animal welfare standards.

In addition to its food products, Cranswick said its pet products business had made strategic progress, with the firm implementing a £10m capital investment program, while stock build was underway in preparation for the launch into Pets at Home later in the year.

From a financial standpoint, Cranswick said net debt at the end of the quarter was slightly higher than its position in March, but significantly lower than the same time last year.

The firm said it was maintaining a strong financial position, with committed, unsecured facilities of £250m providing it with comfortable headroom.

Looking ahead, Cranswick said it expected to maintain its momentum into the second quarter with demand remaining robust in its core UK categories.

While it remained cautious about current market and wider economic conditions, its outlook for the financial year ending 30 March 2024 was now anticipated to exceed previous expectations.

“We have made a strong start to the year, delivering another quarter of growth during which we have again supported our customers by providing excellent service levels to ensure full availability of our products,” said chief executive officer Adam Couch.

“None of this would have been possible without the incredible support of our colleagues across the business and I thank them for their continued commitment and dedication.

“Our continued positive progress reflects the substantial ongoing investment in our asset base and the quality and capability of our colleagues across the business.”

Cranswick said it would announce its interim results for the 26 weeks ended 23 September on 21 November.

Reporting by Josh White for Sharecast.com.