2 February 2023
Cranswick plc
(“Cranswick” or “the Company” or “the Group”)
Third quarter trading statement
Cranswick, a leading UK food producer, today provides its scheduled update on trading for the 13 weeks to 24 December 2022.
Current trading
Revenue growth accelerated in the third quarter, building on the momentum generated in the first half of the year. All four product categories were strongly ahead of the corresponding period in our core UK market, reflecting solid underlying volume growth together with further cost inflation recovery. Trading in December was particularly robust, underpinned by strong demand for our Fresh Pork, Convenience and Gourmet festive range of products. Our customers and consumers continue to recognise and appreciate the quality, value and versatility of pork.
Poultry revenue growth reflected a positive contribution from the new Hull breaded poultry facility which offset lower sales from the Hull cooked poultry facility. There was a very limited impact on Fresh Poultry revenue following Avian Influenza outbreaks at five farms across our poultry farm estate early in the period; we have received full financial compensation for all lost birds. In recent weeks the incidence of confirmed cases in the UK has reduced, but we continue to enforce strict biosecurity protocols across all our farms.
Far East export sales were well ahead of the same period last year, with slightly lower volumes comfortably offset by significantly stronger pricing.
Cranswick Pet Products made a modest contribution to Group revenue in the third quarter. During the period we made further progress in reshaping the business for the future to create a more efficient manufacturing operation with a strong complementary customer base.
Investment
Our broad-based investment plans remain firmly on track with several substantial projects in progress which will enhance the capability of and add capacity to several of our flagship production facilities as well as driving through further operating efficiencies. We have also committed to a number of capital projects which support our ‘Second Nature’ sustainability programme.
During the period we invested further in our pig farming operations and, in so doing, we have lifted our self-sufficiency to over 40% of our total requirement for British pigs.
Defined benefit pension scheme
A subsidiary of the Group operates a legacy defined benefit pension scheme for certain employees, towards which the Group was contributing cash of £1.8 million each year. In December 2022, a buy-in contract was purchased for £3.7 million, which secures members benefits in full, sees all the scheme’s financial and demographic risks hedged and requires no further future cash contributions by Cranswick.
‘Second Nature’ Sustainability
In December 2022 we received confirmation of our latest Carbon Disclosure Project (CDP) scores: grade A- for Climate and grade B- for Soya within Forests were both a grade improvement on the previous year. Our new, improved grades reflect our continued focus on and commitment to delivering our industry leading ‘Second Nature’ strategy.
Financial position
As expected, net debt increased during the period, reflecting the usual seasonal uplift in working capital, further investment in biological assets and our ongoing capital investment programme. The Group remains in a robust financial position with committed, unsecured facilities of £250 million providing comfortable headroom.
Outlook
The outlook for the current financial year remains in line with the Board’s expectations.
The Board is confident that the continued focus on the strengths of the Company, which include its long-standing customer base, breadth and quality of products, robust financial position and industry leading asset infrastructure, will support the further successful development of Cranswick during the current year and over the longer term.
Preliminary results
The Company’s next scheduled comment on trading will be the preliminary results announcement for the 52 weeks ending 25 March 2023, on Tuesday 23 May 2023.
Adam Couch, CEO of Cranswick, commented:
” We have delivered another strong quarter of growth, building on the momentum generated in the first half of the year. Our core UK market remains extremely resilient as our customers and the UK consumer continue to recognise and appreciate the quality, value and versatility of our pork and poultry product ranges.
“The broad-based inflationary pressure we are experiencing across our cost base continues to be well controlled and mitigated.
“Our relentless focus on innovation together with the passion and dedication of our people are the key enablers of our continued successful progress and development. I would like to thank all of our colleagues for their ongoing commitment and support.”