Cranswick raises earnings guidance but signals economic uncertainty
- Cranswick reported revenue increased 14.7% for the 13 weeks ending June 24
- The company’s four main food product segments experienced strong growth.
- The company was a notable winner from the pandemic due to more home-cooked meals.
Cranswick has raised annual guidance after a strong first-quarter performance, but the food producer expressed caution about current economic conditions.
The Yorkshire-based business reported revenue rose 14.7% year-on-year for the 13 weeks ending June 24 on stronger results across its four main food product segments.
Growth was driven by higher breaded poultry, fresh pork, convenience and gourmet volumes, which offset lower cooked poultry volumes and weaker exports caused by weaker seasonal demand in China.
Healthy: Cranswick has raised its yearly guidance after strong first quarter performance
Demand across the group’s core categories has remained strong over the past month, despite cost-of-living pressures facing British consumers.
As a result, the firm’s full-year outlook for the FTSE 250 is now forecast to beat earlier expectations.
Adam Couch, Cranswick Chief Executive, said: “We have had a good start to the year, delivering another quarter of growth during which we have again supported our customers by delivering excellent service levels to ensure full availability of our products.”
Cranswick continued to be affected by inflation, but the group noted that the pace of cost increases had begun to slow, supported by investment in automation and other efficiency measures.
Higher costs have plagued the company since Russia’s invasion of Ukraine sent food and fuel prices up significantly.
Many independent pork producers have reduced or even stopped production entirely due to rising feed costs.
The consequent drop in the size of the UK pig herd caused the average price of pigs to rise 28% over the quarter.
Cranswick said he was investing in expanding his herd “to ensure we have the quantity and quality of hogs required to meet our customer’s requirements.”
In addition, the company is developing its cooked poultry site to increase cooking and roasting capacity and committing £10m of capital investment to its pet products division.
In January 2022, the group acquired Lincolnshire-based Grove Pet Foods, a manufacturer of dry dog food and owner of nutrition brands Vitalin and Alpha.
Couch added: “Our continued positive progress reflects the ongoing substantial investment in our asset base and the quality and capability of our colleagues across the business.”
Cranswick shares they were 0.9 per cent higher at £33.74 on Monday afternoon, though their value is down by around a fifth from their mid-2021 peak.
The company was a notable winner from the pandemic, as the forced closure of hospitality venues due to Covid-related restrictions prompted Brits to cook more meals at home.