REG - Cranswick PLC - First quarter trading statement

CranswickAnnouncement

24/07/2023 07:00

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RNS Number : 8737G  Cranswick PLC  24 July 2023

24(th) July 2023

 

Cranswick plc

("Cranswick" or "the Company" or "the Group")

 

 

First quarter trading statement

 

Cranswick, a leading UK food producer, today provides 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

The Group 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.

 

 

 

Enquiries:

 

 Cranswick plc                            01482 275 000
 Mark Bottomley, Chief Financial Officer

 Powerscourt                              020 7250 1446
 Nick Dibden / Elizabeth Kittle           cranswick@powerscourt-group.com (mailto:cranswick@powerscourt-group.com)

 

Notes:

 

1.     Cranswick is a leading and innovative supplier of premium, fresh
and added-value food products.  The business employs over 13,700 people and
operates from 22 well-invested, highly efficient facilities in the UK.
Cranswick was formed in the early 1970s by farmers in East Yorkshire to
produce animal feed and has since evolved into a business which produces a
range of high quality, predominantly fresh food, including fresh pork,
poultry, convenience, gourmet products and pet food.  The business develops
innovative, great tasting food products to the highest standards of food
safety and traceability.  The Group supplies the major grocery multiples as
well as the growing premium and discounter retail channels.  Cranswick also
has a strong presence in the 'food-to-go' sector and a substantial export
business. Results for the 52 weeks to 25 March 2023 showed revenue of
£2,323.0m and profit before tax of £139.5m. For more information go to:
www.cranswick.plc.uk (http://www.cranswick.plc.uk)

 

2.     Cranswick is committed to ensuring that its business activities are
sustainable from farm-to-fork.  Our ambitious sustainability strategy 'Second
Nature' has been developed to deliver our vision to become the world's most
sustainable meat business.  Find out more at: www.thisissecondnature.co.uk
(http://www.thisissecondnature.co.uk)

 

3.     This announcement is based on information sourced from unaudited
management accounts.

 

4.     This announcement contains certain forward-looking statements with
respect to the financial conditions, results of operations and businesses of
Cranswick. These statements involve risk and uncertainty because they relate
to events and depend upon circumstances that will occur in the future. There
are a number of factors that could cause actual results or developments to
differ materially from those expressed or implied by these forward-looking
statements. Nothing in this announcement should be construed as a profit
forecast.

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