Cranswick has reported a 10% uplift in Q1 turnover but operating margins have taken a hit due to higher input costs, and the start-up costs of a new gourmet pastry facility.
The pork processor reported underlying turnover was 10% up on the same time last year, reflecting strong growth across most product ranges, it said today in an interim management statement for the period 1 April to 28 July 2013.
Total sales for the three months were 12% up when taking into account the contribution from Kingston Foods (acquired by Cranswick on 29 June 2012) and “modest third-party sales” made by Wayland Farms (formerly East Anglian Pigs), acquired on 29 April 2013.
Although pig prices had increased during the first quarter to a new record high, the impact had been absorbed through “on-going efficiency improvements and by the strong volumes processed through the group’s facilities”, it said.
Net debt at the quarter-end was £17m higher than the same time last year, at £55m. It reflected the “usual seasonal uplift in working capital”, the group’s on-going capital investment programme and the £13m investment in Wayland Farms, the group said.
Cranswick has completed work on its gourmet pastry facility at Malton, North Yorkshire and it has also started work on extending its Delico cooked meats facility in Milton Keynes.
Cranswick broker Shore Capital said that after a quiet and cold spring, sausage sales had been very strong in July while bacon and cooked meat sales had shown double-digit growth through the period. “Fresh pork sales have simply been ‘stellar’ to our minds, driving ahead by over 20%,” analyst Darren Shirley added in a note.
Cranswick continued to be as efficient as possible and so mitigate the input price pressure, Shirley added.
As previously announced, Patrick Farnsworth will stand down as non-executive director at today’s AGM. Kate Allum, CEO of First Milk, joined the board as a non-executive director on 1 July 2013.
Neither Investec nor Shore Capital have made any changes to their forecasts as a result of this morning’s first-quarter interim management statement.