Strong growth in fresh pork, bacon and cooked meats helped boost Cranswick’s sales by 12% over the past year.
Total sales – taking into account acquisitions – were up by 13% in the year to 31 March, the company said in a trading update today.
In addition to strong growth in pork, pastry sales had also done well and exports were “well ahead” of 2012/13,“reflecting robust demand for pork products in Far Eastern markets”, Cranswick said.
However, it warned operating margins would be “slightly below” those seen a year ago, citing “record input prices”.
The company stressed its financial position remained strong despite recent capital investments and acquisitions such as the purchase of East Anglian Pigs, with year-end net debt set to be “substantially lower” than at the end of the previous quarter and below the level seen in 2012/13.
Cranswick added: “The group recently extended the term and increased the size of its banking facility, leaving the business in a sound financial position, with committed, unsecured facilities of £120m which provide generous headroom through to July 2018.”
Cranswick will report its full-year results on 19 May.
Analyst reaction
Shore Capital described Cranswick’s performance as “another robust year in toughening market conditions”, with record UK pig prices and a “weak UK grocery market”.
During the fourth quarter, “we believe bacon and Continental sales increased by high single-digits, with sausage sales up mid single-digit and fresh pork in the low single-digit range against a particularly tough comparative” it said. “On a full-year basis, management highlights fresh pork, bacon and cooked meats as particularly strong categories.”
N+1 Singer said Cranswick’s trading update was “satisfactory” overall. “Looking forward, we detect an understandable degree of caution given the ongoing challenges faced by the supermarket sector. These are not new to Cranswick, and it generally has a good track record in managing various headwinds. Assuming pig-price inflation does not rise materially over the summer months, we see no reason why Cranswick should not have a reasonable 12 months of trading going forward.”
Investec said Cranswick had delivered another year of “strong revenue performance” and revised its target price from 1315p to 1390p. “We think Cranswick’s track record for growth justifies a small premium”, it said.
Meanwhile, Panmure said Cranswick’s sales growth was in line with its expectations. “Cranswick’s competitive position in the UK has improved due to the recent industry changes and its move to vertically integrate its business,” it added. “Additionally the entry into gourmet pastry has added another niche market category. We feel that the current valuation, though, reflects this and we maintain our ‘hold’ recommendation and 1330p target price.”
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