The outlook for Cranswick is a lot more positive than it was a year ago when a profit warning caused the company’s share price to plummet 12%. On Wednesday, the meat processor reported a 7.4% improvement in first-quarter sales, which left shares virtually unchanged at 850p.
Investec said the trading update indicated Cranswick’s first-half should “show good profit progress”. The main risk factor over the coming quarters will be rising pig prices, which were blamed for the profit warning last year. Cranswick was unable to pass on the higher prices because of the speed and size of the increases.
Since then, the share price has increased by more than a third, helped by strong consumer demand and a stable pig price. Further share price growth is expected to come from resilient demand for the company’s pork products.
“Cranswick should continue to be a beneficiary of downtrading by consumers to pork from relatively higher priced meats,” said Panmure analyst Damian McNeela.
Greencore also published an encouraging trading update this week. The Irish ready meal supplier reported third-quarter like-for-like sales growth of 6.7% despite the negative impact of the recent wet weather. Shares crept up 2% this week, having increased by more than 20% so far this year, boosted mainly by news of two acquisitions in the US and new business wins.
Shares in household products giant Reckitt Benckiser remained steady this week after it reported a 4% improvement in both second-quarter like-for-like sales and operating profits. The share price dipped a fraction on the day of the results (Monday) to £35.07 but analysts were upbeat about the results. “Overall, we consider that this quarter was another step towards sustained recovery in top-line performance,” said Bernstein analyst Andrew Wood.
There was more bad news for Tesco this week. Ratings agency Standard & Poor’s cut the outlook on the supermarket from ‘stable’ to ‘negative’, citing intensifying competition in UK grocery and weak consumer spending.
The share price dipped slightly on Wednesday to 317.95p - it has hovered around that level since January, when a profit warning sent it crashing from more than 400p.