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UK pork supplier Cranswick (CWK) has announced the acquisition of 100% of Crown Chicken for £40m to further build its poultry business.
The deal will be funded from existing banking facilities and sees Cranswick buy out the Thacker family owners of the East Anglia-based poultry producer.
Crown breeds, rears and processes fresh chicken for supply into a broad customer base across grocery retail, food service, wholesale and manufacturing channels.
It also has milling operation which fulfils all of the business’ own feed requirements as well as supplying feed to other pig and poultry producers in East Anglia.
For the year ended 31 December 2015, revenue for Crown was £83.8m and adjusted EBITDA was £6.6m. Crown employs a total work force of approximately 400 across its operations.
The transaction is expected to be “modestly” earnings enhancing for Cranswick in the current financial year.
Nigel Armes (mill director) and Matthew Ward (agricultural director) will remain with the business, while current chairman of Crown David Thacker will retire from the business.
Adam Couch, CEO of Cranswick commented: “Crown is a well-respected operator in the UK poultry sector and represents an excellent opportunity for Cranswick to continue the development of its UK poultry business, building on the highly successful acquisition of Benson Park, the market leading producer of premium cooked poultry, in October 2014.
“This acquisition represents important progress in our long term growth strategy of developing new product channels in both pork and other proteins.”
Cranswick shares have jumped 4.7% in early trading to 2,283p.
Morning update
UK milling group Carr’s(CARR) has issued its half year financial results this morning, which state that the UK floods caused “no adverse financial impact” despite affecting a number of its sites in Cumbria.
Carr’s said “appropriate and comprehensive” insurance cover mitigated the impact of floods and the affected sites returned to operation faster than expected.
Overall the results were in line with expectations as the depressed farm gate milk price, challenging broader agriculture market and mild weather conditions in the UK have resulted in tough market conditions, which have continued into the second half of the year.
During the 26 weeks ended 27 February 2016 group revenues were £189.1m, down 9.4% from the prior year primarily due to commodity price movements. Profit before tax decreased by 0.9% to £10.5m, while group operating profit was stable at £9.6m.
In the UK sales volumes of feed blocks are down 2.8% year on year. Manufactured animal feed has seen a very slight decline of 0.3% on last year, outperforming the sector which has seen a national decline of circa 4.3% on average.
Tim Davies, CEO, commented: “The Group is operating in challenging markets, however our international presence and diversity has provided a robust H1 performance. Trading in the second half is as anticipated and we remain on track to meet the full year expectations of the Board.
“The UK agricultural market has suffered from the depressed farm gate milk and livestock prices and we expect this to continue through 2016 and 2017, which will directly adversely impact our UK farm customers.”
Carr’s shares have slumped 4.1% to 146.2p this morning.
The FTSE 100 has opened fairly flat this morning, up just 0.1% to 6,209.3pts.
Cranswick (above) is the big early mover, but Tesco (TSCO) is also up 1.5% to 193.4p this morning. Also on the up are McColl’s Retail Group (MCLS), up 2.3% to 169.8p, Finsbury Food Group (FIF), up 1.7% to 119.9p, and Conviviality (CVR), up 1.5% to 234p.
Falling along with Carr’s is Real Good Food (RGD), down 3.3% to 44.5p and B&M European Value Retail (BME), down 1.5% to 261.6p.
This week in the City
The week will be dominated by Tesco’s full year earnings release on Wednesday. Media speculation over the weekend suggests Tesco is set to announce a surprise rise in sales and a significant rebound in profits. Tesco’s full-year pre-tax profits are expected to be around £930m after property write-downs took Tesco to a £6.4bn annual loss last year.
Elsewhere this week, WH Smith (SMWH) is scheduled to release its interim results on Wednesday, while under-pressure Poundland (PLND) will have a pre-close trading statement on Thursday as it tries to allay City concerns that its trading momentum has stalled during a difficult integration of 99p Stores.
There’s also Nichols (NICL) AGM on Thursday, while FMCG giants Unilever (ULVR) and nestle (NESN) are both scheduled to issue a first quarter sales update also on Thursday.
UK inflation figures for the Retail Price Index and Consumer Price Index are out tomorrow, while the BRC Sales Monitor for the month is out on Wednesday. Thursday brings the latest Bank of England interest rate decision, with no move from the current rate of 0.5% predicted.
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