CRANSWICK plc: INTERIM RESULTS
Strong revenue growth and positive earnings momentum
21 November 2023
Cranswick plc (“Cranswick” or “the Company” or “the Group”), a leading UK food producer, today announces its unaudited results for the 26 weeks ended 23 September 2023.
Commercial and strategic highlights:
· Strong revenue growth of 12.3% reflecting effective inflation recovery and resilient volume growth across all four core UK food categories
· A positive contribution from rapidly expanding pig farming operations, robust returns from effective deployment of capital and tight cost control lifted adjusted operating margin from 6.1% to 6.8%
· Capital investment programme continues at pace with relentless focus on automation, adding scale and delivering further quality, technical and safety improvements
o Total capital expenditure of £39.4m across the Group’s asset base to add capacity, capability and drive operating efficiencies with over £600m now deployed across the Group’s asset base since FY16
o £62m multi-phased expansion project underway at the Hull pork primary processing site
o £23m fit out of new houmous facility at Worsley, Manchester now underway
· £31.7m1 acquisition of Elsham Linc indoor pig farming business further diversifies the Group’s pig farming operations and adds additional feed milling capability, with self-sufficiency in UK pigs now over 50%
Sustainability highlights:
· Ranked first in second edition of ‘The Better Food Index’2, which ranks the 30 largest food and drinks companies in the UK on their actions and commitments towards a fair and sustainable food system
· Upgraded to ‘low risk’ in the ‘Coller FAIRR Protein Producer Index’3 2023/24 and ranked fifth overall
· We continue to work towards our ambition of zero edible food waste by 2030, and as part of this journey we have now redistributed the equivalent of 1.2m meals to vulnerable people through our partnership with FareShare
Financial highlights4:
| H1 2023 | H1 2022 | Change(Reported) | Change(Like-for-like5) | ||
| Revenue | £1,253.7m | £1,116.3m | +12.3% | +12.0% | |
| Adjusted Group operating profit | £85.5m | £68.4m | +25.0% | ||
| Adjusted Group operating margin | 6.8% | 6.1% | +69bps | ||
| Adjusted profit before tax | £81.6m | £66.0m | +23.6% | ||
| Adjusted earnings per share | 112.2p | 98.6p | +13.8% | ||
· Statutory profit before tax 41.3% higher at £86.9m (2022: £61.5m)
· Statutory earnings per share up 29.9% to 119.5p (2022: 92.0p)
· Interim dividend increased by 10.2% to 22.7p (2023: 20.6p)
· Return on capital employed6 up 54bps to 16.4% (2023:15.9%)
· Net debt (excluding IFRS 16) £10.1m lower at £51.0m (September 2022: £61.1m and March 2023: £20.2m)
· Robust balance sheet and low leverage with £250m bank facility providing significant headroom
Outlook:
Whilst we remain cautious about current market and wider economic and geopolitical conditions, the outlook for the current financial year ending 30 March 2024 is now expected to be at the upper end of current market consensus7.
Adam Couch, Cranswick’s Chief Executive Officer commented:
“Our strong start to the year continued through the second quarter. Our relentless focus on quality, service, innovation, and managing our cost base through this extremely challenging inflationary cycle, allied to delivering exceptional customer service, has underpinned these results.
“Momentum has continued through the start of the third quarter as our customers and the UK consumer continue to appreciate the affordability, value for money and versatility of our core pork and poultry categories.
“Our continued positive progress is made possible by the substantial ongoing investment in our asset base, expansion of our pig farming operations and the quality and capability of our colleagues across the business.
“We have an excellent track record of deploying capital having invested £600m since FY16 in new facilities, capacity expansion and automation projects underpinned by an unrelenting focus on delivering efficiency improvements.
“I want to thank, once again, our colleagues and all our stakeholders for their continued support and commitment as we build towards what promises to be another extremely busy festive period.
“Notwithstanding the many challenges that we, our industry and the wider economy continue to experience, I am confident that the strengths of our business, which include its diverse and long-standing customer base, breadth and quality of products and channels, robust financial position and industry leading infrastructure, will support the further development of Cranswick in the current financial year and over the longer term.”
| 1 | Refer to Note 9 for breakdown of cash outflow on acquisition. |
| 2 | Tortoise Media’s ‘The Better Food Index’ is a ranking of the 30 largest food and drinks companies in the UK on their actions and commitments towards a fair and sustainable food system. |
| 3 | The ‘Coller FAIRR Protein Producer Index’ assesses 60 of the largest listed global meat, dairy and aquaculture companies on ten ESG factors: greenhouse gas emissions, deforestation and biodiversity, water use and scarcity, waste and pollution, antibiotics, working conditions, animal welfare, food safety, governance and alternative proteins. |
| 4 | Adjusted and like-for-like references throughout this statement refer to non-IFRS measures or Alternative Performance Measures (‘APMs’). Definitions and reconciliations of the APMs to IFRS measures are provided in Note 16. |
| 56 7 | For comparative purposes, like-for-like revenue excludes the current year contribution from current and prior year acquisitions prior to the anniversary of their purchase.Return on capital employed is defined as adjusted operating profit divided by the sum of average opening and closing net assets, net debt/(funds), pension (surplus)/deficit and deferred tax.Market consensus for adjusted profit before tax as at 20 November 2023 ranged between £153.2m and £160.8m. |
Presentation
A conference call for analysts and institutional investors will take place at 9.30am today. Slides to accompany the call will be sent to registered participants ahead of the call. Slides will also be available on the company website. For the dial-in details please contact Powerscourt on the details below.
Enquiries:
Cranswick plc
| Mark Bottomley, Chief Financial Officer | 01482 275 000 |
| Powerscourt | |
| Nick Dibden / Elizabeth Kittle | 020 7250 1446 |
| cranswick@powerscourt-group.com |