Pastry and poultry drive Cranswick’s growth
Cranswick reported the highest growth rates in pastry, premium poultry and burgers in preliminary full-year results, posted on 24 May.
The manufacturer chalked up a whopping 31% rise in pastry sales, albeit from a small base.
“We are encouraged by the 31% sales growth and what appears to be a strengthening relationship with the category’s key customer, we believe underpinned by Cranswick’s new product development capabilities,” said Shore Capital analyst Darren Shirley.
“We also note the group has delivered 12 months of improved operational performance, which is pleasing. Shore Capital visited the artisan facility in February and found it very impressive.”
Cranswick reported a 24% increase in sales of premium poultry. This was supported by a £9m investment in its Benson Park plant, which improved its operational performance and broadened its potential product range.
“The business is said to have achieved new wins with both new and existing customers, and is said to be ‘well placed’ as it entered the new financial year,” noted Shirley.
Sales volumes of premium burgers climbed by 18% year-on-year. Future business from 2017 onwards in the firm’s ‘Butchers Choice’ category looked set to build on this, said Shirley. “... With capital investment at the Lazenby’s facility to support ‘substantial additional business’ and £2m of spend confirmed at Norfolk to further underpin supply to another leading customer, additional volumes in both sites are expected to benefit in H1 2017.”
Bacon sales rose by 12%, driven by premium bacon and gammon and underpinned by winning sole supply to a leading customer. During the financial year, Cranswick completed its investment in the former Kingston Foods bacon factory in Milton Keynes, enabling it to supply more of the bacon and gammon market.
In continental products, including non-meat offerings, sales increased 11%. This had been fuelled by growing demand for products such as charcuterie, cheeses, pasta and olives and the growing strength of fine brand Woodall’s in branded and own-label ranges, Cranswick claimed.
Fresh pork sales grew by 9%, aided by recovering volumes from a principal customer from the second half of 2015. The company confirmed the next phase of development/investment had begun at its Norfolk facility, with £6m invested in replacing the existing abattoir. This would increase capacity, improve efficiency and support the process to gain US Department of Agriculture (USDA) accreditation.
The firm reported strong export progress, with volumes to the Far East ahead by 32%.
Cranswick posted adjusted pre-tax profit up 13.7% to £65.7m in the year to 31 March 2016, technically returning it to the black after recording net debt of £17.3m the year before. However, this was offset by its £39.3m acquisition of Crown Chicken, meaning it still ended the year with a “modest” net debt, said Shirley. Total sales rose 6.6% to £1.1bn, driven by a 12% increase in sales volumes.
Cranswick chairman Martin Davey said: “The past year has been one of strong commercial growth and continued strategic development for Cranswick. This has enabled sales, which exceeded £1bn for the first time a year ago, to progress further.
“The business has made significant progress, both commercially and strategically, over the past year. There are strong customer relationships, a broadening product portfolio and growing export channels.
“Aligned with well-invested and efficient production facilities, skilled management teams and a strong balance sheet, this gives the board confidence that Cranswick is well positioned to meet the challenges that may arise and to continue its successful long-term development.”
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