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Meat processor Cranswick has raised its annual financial expectations after a “strong” start to the year and signs inflation is starting to slow.
The group said in a trading update for the 13 weeks to 24 June that demand had remained “resilient” in its core categories, with revenues 14.7% ahead year on year.
UK sales across all four food product categories were ahead year-on-year, underpinned by positive volume momentum in fresh pork, convenience and gourmet products. Poultry volumes were modestly down on last year, with lower cooked poultry volumes partly offset by strong growth in breaded.
Export sales were lower in the first quarter, with Far East volumes remaining subdued given a seasonal slowdown in demand in China.
Cranswick added it continued to proactively manage and mitigate cost inflation through tight cost control and recovery, but said the rate of inflation was starting to slow.
CEO Adam Couch said: “We have made a strong start to the year, delivering another quarter of growth during which we have again supported our customers by providing excellent service levels to ensure full availability of our products.
“Our continued positive progress reflects the substantial ongoing investment in our asset base and the quality and capability of our colleagues across the business.”
Cranswick noted a significant contraction in the UK pig herd over recent months in response to the rapid escalation in feed costs since the outbreak of war in Ukraine.
The group said many independent producers had chosen to cut back or cease production entirely in response to the “unprecedented” inflationary pressures.
This sustained tightening of supply resulted in the average UK pig price across the quarter increasing by 28% compared to the same period last year.
Cranswick said momentum from the first three months of the year had continued into the second quarter.
“Whilst the board remains cautious about current market and wider economic conditions, the outlook for the current financial year ending 30 March 2024 is now expected to be ahead of its previous expectations,” the group added.
Shares in Cranswick jumped 2.6% to 3,431p this morning.
Morning update
Ocado has settled all litigation with Norwegian rival AutoStore following a long-running legal battle over intellectual property.
A short statment released to the London Stock Exchange this morning said the terms of the agreement were confidential.
However, it noted that AutoStore would give the UK grocery tech firm £200m as part of the settlement, paid in 24 monthly instalments, starting this month.
The statement added there was a cross-licence of certain patents between the parties, with Ocado and AutoStore having complete freedom to access and use technology covered by each other’s pre-2020 patents.
The agreement also gave access to part of each party’s patent portfolio for them to use or develop their own products.
Ocado CEO Tim Steiner said: “I am pleased that we have worked together to resolve our differences and can now continue to focus on what we do best - innovating, developing and enabling partners to access world-beating technology.”
Ocado’s shares have soared another 10% this morning to 756p, adding to momentum following last week’s first-half results. The stock is up 27% over the past five trading days and more than 42% in the past month.
The FTSE 100 started the week negatively, falling 0.3% to 7,644.22pts this morning.
Early risers alongside Cranswick and Ocado, include Virgin Wines UK, up 6.9% to 32.6p, and McBride, up 4.2% to 34p.
Bakkavor was among the early fallers, down 3.6% to 101.7p, while THG is down 1.6% to 95.5p and Kerry Group is down 1.3% to €89.70.
This week in the City
It looks to be a busy week ahead on the markets as Q2 earnings season gets into full swing.
All eyes will be on Unilever tomorrow as the CPG giant files first-half figures and the maiden set of results for new CEO Hein Schumacher.
NIQ also publishes its latest grocery till roll data for the four weeks to 15 July tomorrow, Compass updates with a Q3 trading statement and B&M holds its AGM.
Reckitt Benckiser, Danone, British American Tobacco and Vimto maker Nichols all release interims on Wednesday morning, with Coca-Cola putting out Q2 numbers in the US later in the day.
Nestlé follows Unilever, Danone and Reckitt with its second-quarter numbers on Thursday, while a trading statement from Britvic is also scheduled, Tate & Lyle has its AGM and Mondelez and McDonald’s both report in the US.
Colgate-Palmolive closes out the week with quarterly results on Friday in the US and Science in Sport holds its AGM in the UK.
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