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Meat processor Cranswick has hailed a year of “strong” financial progress as demand for chicken and pork recovered.

Like-for-like revenues increased 11.6% to £2.6bn in the year ended 30 March 2024, underpinned by a 4.5% rise in volumes in the UK.

The pork and poultry supplier attributed the results to inflation recovery as it passed costs on to customers and the acquisitions of the Elsham pig farming business and cooked meat and bacon processor Froch Foods.

CEO Adam Couch said the “strong” performance was also driven in part by shoppers seeking affordable proteins during the cost of living crisis. He added that following the initial inflation shock last year, the group was also seeing the recovery in demand across all its categories, with “substantial” growth in premium products.

Pre-tax profits increased 13.5% to £158.4m and adjusted operating profits jumped 26.3% to £185.1m as Cranswick strengthened margins from 6.3% to 7.1% through cost controls and ongoing investment in the business.

“Our successful performance owes a great deal to the substantial investment we have put into enhancing our farming infrastructure and expanding our vertical integration,” Couch said.

“We have increased the size, scale and quality of our pig herds through ongoing organic growth and the acquisitions of new indoor and premium outdoor pigs.”

Chairman Tim Smith added the success had been achieved in the face of “considerable ongoing challenges” in the UK food and farming industry, with labour shortages, financial pressures and political uncertainty all proving to be “major concerns” for many independent producers.

“It is now more crucial than ever for the UK to have a thriving and resilient food and farming sector, especially given the challenges our food system is currently facing.

“The government has identified that our national security depends on addressing a small number of critical risks which include food security. It seems imperative to me that the government should better concentrate its resources on improving our resilience to those risks.”

Cranswick proposed a final dividend of 67.3p per share, a 14.5% rise on last year.

The group started the current financial year in line with the board’s expectations.

Morning update

Food inflation falls for 15th month in a row

Inflation in the grocery sector is returning to “more normal levels”, according to the latest market update from Kantar this morning.

It is now sitting at 2.4% after falling for the 15th month in a row and is at the lowest level since October 2021.

Inflation is now just 0.8 percentage points higher than the 10-year average between 2012 and 2021.

Fraser McKevitt, head of retail and consumer insight at Kantar, said that a rate of around 3% typically saw “marked changes” in consumer behaviour, with shoppers trading down when inflation is higher than this figure and vice versa when it dropped.

“However, after nearly two and a half years of rapidly rising prices, it could take a bit longer for shoppers to unwind the habits they have learnt to help them manage the cost of living crisis,” he added.

Take-home grocery sales rose by 2.9% over the four weeks to 12 May.

Ocado was again the fastest growing grocer over the 12 weeks to 12 May, with sales up by 12.4% – well ahead of the total online market, which saw sales increase by 5.4%.

Lidl reached a new record-high market share of 8.1%, fuelled in part by its bakery counters, as well as its loyalty scheme.

Greencore raises profits guidance

Greencore has bounced back to the black in the first half and lifted forecasts for the year as its transformation plan delivered results.

The sandwich maker increased like-for-like sales by 4.1% in the six months to 29 March.

Total revenues fell 6.4% to £866.1m as the group exited a number of low-margin contracts last year. However, Greencore registered like-for-like volume growth of 0.5% in the half, which was ahead of the wider market thanks to “key category outperformance”.

The recovery plan implemented by CEO Dalton Philips also led to a £14.7m first-half pre-tax profit, compared with a £6.2m loss a year ago.

Adjusted operating profit more than doubled from £11.8m to £28.3m.

“Greencore delivered excellent progress against its strategic priorities in the first half and continued to outperform the market in a difficult consumer spending environment,” Philips said.

“The group’s accelerating financial performance is very encouraging as we focus on driving profitability and returns. We are working with our major retail customers to develop new products and new offerings which are driving the growth of our food to go segment ahead of the market.”

Greencore raised adjusted operating profit guidance for the full year to a range of £86m to £88m, ahead of current market expectations.

The group also announced a target to return a further £50m to shareholders over the next 12 months, starting with a share buyback of up to £30m. It also intends to declare of dividend for the year to September 2024 if the performance continues as expected.

Naked Wines make progress on turnaround

Underlying profits at Naked Wines are expected to be at the top end of the range as the struggling group continued to make progress in its turnaround attempt.

A pre-close trading update for the year to 1 April said revenues were in line with guidance at about £290m, a 13% fall on the previous 12 months.

Adjusted EBIT is expected to be about £5m, which is at the upper end of the £2m to £6m forecasted range.

Operating losses will be between £13m and £18m as the business is hit by a number of one-off costs.

New CEO Rodrigo Maza said: “These results demonstrate the continued progress that is being made to make the business leaner and stronger.

“With higher levels of cash, a moderating decline in sales and demonstrable underlying profitability we have a strengthening platform from which to build as we continue to drive towards profitable growth.

“FY24 was a challenging year for our winemakers, our staff, our customers and our shareholders and I’d like to thank all of them for their continued support and loyalty. We hope to continue demonstrating tangible progress in FY25.”

Momentum continues at SSP 

Travel food-to-go group SSP has continued its recovery from the pandemic, with higher sales and profits in its first half.

Revenues increased 15% to £1.5bn in the six months to 31 March, while EBITDA climbed 17% to £106m and operating profits jumped 10% to £38m.

However, operating margins dipped slightly from 2.6% a year ago to 2.5% this half. And net debt ballooned from £297m to £619m.

CEO Patrick Coveney said the first half was a period of “continued momentum” with “good strategic and financial progress”.

“Trading momentum has continued into the second half, and we are confident in delivering on our expectations for the full year,” he added.

Morning shares

The FTSE 100 opened down 0.3% to 8,396.80pts this morning.

Shares in Cranswick fell 2.7% to 4,307.4p, mostly likely swayed by no upgrades to guidance for the new FY and also talk of “ongoing challenges” in the sector.

Greencore shares, by contrast, soared by 13% to 157.2p as markets opened thanks to upgrades and a share buyback programme.

Naked Wines also jumped 4.2% to 54.2 thanks to its progress.

And SSP Group sank by 8.5% to 191p.

Yesterday in the City

The FTSE 100 nudged up 0.1% to 8,424.20pts.

As falling first thing, shares in Hilton Food Group recovered to end the day 0.2% higher at 0.2%. It followed a robust pre-AGM trading update reporting volume and sales growth so far in 2024.

Elsewhere, Science in Sport rose 4.9% to 18.1p, Glanbia moved up 4.7% to €17.65 and Naked Wines increased 4.3% to 52p.

Fallers included Just Eat Takeaway, down 3.6% to 1,196p, Ocado, down 2.4% to 354.3p, and Premier Foods, down 2.4% to 172p.