Cranswick sees FY ahead of expectations after strong first quarter

Food producer Cranswick said it expected full year results to be ahead of expectations after first quarter revenues rose by almost a quarter as more Britons ate at home during the coronavirus lockdown.

The company on Monday said revenue in the 13 weeks to June 27 was up year on year. Excluding the contribution from acquisitions made in the prior year, revenue on a like-for-like basis was 19.2% higher. The trend had continued into the second three months of the fiscal year, it added.

Cranswick, which supplies pork and chicken to UK grocers, said it expected retail volumes to normalise for the rest of the year as people started to eat out again, adding that capial expenditure would be lower than last year.

“Whilst the board remains cautious about the longer-term economic impact of Covid-19, the uncertainty surrounding the ongoing Brexit negotiations and the conclusion of trade deals with other countries, the outlook for the current financial year ending 27 March 2021 is now expected to be ahead of its previous expectations,” it said in a statement.

House broker Shore Capital upgraded its 2021 full-year current pre-tax profit forecast by 10.4% to £116.0m with earnings per share of 178.6p for a 14.2% year-on-year rise.

"Cranswick’s stock is trading on a price/earnings ration of 21.4x and an EV/EBITDA multiple of 12.2x, premium ratings for a premium business in our view that looks very well set to continue to drive sustained medium to long-term growth, robust ongoing net cash generation and deliver attractive high--teens returns," it said.