Cranswick plc (LON:CWK), a leading UK food producer, has provided an update on trading for the 13 weeks to 24 June 2023.
Current trading
Trading in the first quarter of the new financial year has been strong with demand remaining resilient in our core categories. Revenue in the 13 weeks to 24 June 2023 was 14.7 per cent ahead of the same period last year. Consequently, the outlook for the current financial period is now expected to be ahead of the Board’s previous expectations.
UK revenue across all four food product categories was ahead year-on-year, underpinned by positive volume momentum in our Fresh Pork, Convenience and Gourmet products categories. Poultry volumes were modestly below the equivalent period last year with lower Cooked Poultry volumes partly offset by strong growth in Breaded Poultry.
Export sales were lower with Far East volumes remaining subdued reflecting the anticipated seasonal slowdown in demand in China.
Cost inflation continues to be proactively managed and mitigated through tight cost control and ongoing recovery, albeit the rate of inflation is now starting to slow. Accelerated investment in automation projects and a relentless focus on delivering cost saving initiatives, allied to the affordability and value for money of our core pork and poultry categories, continue to drive our competitive advantage.
The UK pig herd has contracted significantly over recent months in response to the rapid escalation in feed costs following the outbreak of war in Ukraine in 2022. Therefore, many independent producers have chosen to cut back or cease production entirely in response to the unprecedented inflationary pressures. This sustained tightening of supply resulted in the average UK pig price across the quarter increasing by 28 per cent compared to the same period last year. Our self-sufficiency is now approaching 50 per cent as we continue to invest in and expand our pig herd to ensure we have the required quantity and quality of pigs to service our customers’ requirements. We expect further sector consolidation, and we will continue to expand our farming capability to ensure continuity of supply, full farm-to-fork traceability, leadership in response to the challenges of sustainability and maintaining the highest animal welfare standards.
Our Pet Products business continues to make strategic progress with the £10 million capital investment programme progressing to plan. The stock build is also underway ahead of the launch into Pets at Home later in the year.
Investment
We continue to invest at pace across our asset base to support future growth and further operating efficiencies. Ongoing investment in retail packing, slow cook capacity and other expansion and efficiency projects are well underway. Additional investment in our Cooked Poultry site will increase cooking and roasting capacity and through innovation will enhance our ability to deliver value-add products in the category. Looking ahead, we expect planned capital investment to add substantial capacity to our pork primary processing operations and drive further efficiencies as we look to service our rapidly growing value-added pork business.
‘Second Nature’ Sustainability
We made further progress in delivering our ‘Second Nature’ sustainability strategy during the period. Initiatives included: continued focus on renewable energy generation, with the ongoing installation of solar panels across our production facilities; a drive towards energy and refrigeration efficiency in new and existing plants including the use of natural refrigerant, and the installation of heat pumps to maximise heat recovery; trialling the use of new lower carbon alternatives to LPG in our poultry sheds; and reducing emissions of our HGV fleet with the continued transition to renewable diesel through the use of HVO and the electrification of trailers.
Financial position
Net debt at the quarter end was modestly higher than the March 2023 year-end position, but well below the level of a year earlier. The Group remains in a robust financial position with committed, unsecured facilities of £250 million providing comfortable headroom.
Outlook
Cranswick plc has made a strong start to the year with momentum continuing into the second quarter with demand remaining resilient in our core UK categories as the UK consumer continues to recognise the quality, value and versatility of our pork and poultry product ranges.
Whilst the Board remains cautious about current market and wider economic conditions, the outlook for the current financial year ending 30 March 2024 is now expected to be ahead of its previous expectations.
The Board is confident that continued focus on the strengths of the Company, which include its long-standing customer relationships, breadth and quality of products and industry leading asset infrastructure, will support the further successful development of the Group over the longer term.
Adam Couch, CEO of Cranswick, commented:
“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. 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.”
Interim results
The Company’s next scheduled comment on trading will be the interim results announcement for the 26 weeks ending 23 September 2023, on Tuesday 21 November 2023.
