Cranswick reports 8% revenue increase
Food producer Cranswick has reported a revenue increase of 8% for the three months to 30 June.
After recently acquiring a leading producer of British cooked poultry, Benson Park, and in the light of selling price deflation, Cranswick has seen a positive start to the year.
The company’s debt net stood at £12 million at 30 June 2015, £21m lower than at the same point last year.
Nicola Mallard, analyst for Investec, predicted that the rest of the year should remain fairly constant for the food producer: “With pig prices stable this quarter, we should not expect to see any unusual moves in margins. We make no changes to forecasts at this stage of the year, but expect growth to be slightly more first-half (1H) biased given expected volume trends.”
Mallard claimed that extracting the contribution of Benson Park, which was acquired last year, the organic revenue progress for Cranswick is 4% while volumes are up by 7%. This indicates an estimated 3% deflation running through the business.
“This reflects lower pig prices quarter-on-quarter which are being passed back to customers. The stronger start to the year has been influenced by the return of a fresh pork contract which commenced in the third quarter of 2014, so this will continue to have a helpful influence on volumes in Q2 too,” explained Mallard.
Pig prices for the UK market have stabilised in Q1, though falling prices in Q4 2015 could produce some lagged benefit to margins.
Mallard added: “We make no changes to forecasts today which predict full-year revenue growth at around 4.5% and a margin of 5.8%. We would expect more of the growth to fall in 1H versus 2H given the volume benefit from the returning contract.”
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