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Cranswick revenue gains as African Swine Fever boosts China demand

Cranswick also announced that it has bought Katsouris Brothers, a Mediterranean food products business, for £43.5mln.

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The outlook for the year remains in line with management's expectations

Pork producer Cranswick plc (LON:CWK) brought home the bacon in the first quarter as an outbreak of African Swine Fever in China boosted demand from the region.

The company said revenue in the three months to the end of June rose 1.5% year-on-year with Far East export revenues “strongly ahead” of last year.

China bought more pork after being hit by African Swine Fever, which kills almost all infected pigs and there is no cure or vaccine.

UK pig prices have increased by 10% since the start of the year but are still below the same period a year ago, Cranswick said.

Cranswick to buy Katsouris Brothers 

Cranswick also announced that it has bought Katsouris Brothers Ltd, a Mediterranean food products business, for a net cash consideration of £43.5mln.

In the year ended 30 June 2019, Katsouris Brothers generated revenue of £68mln and adjusted earnings (EBITDA) of £6mln.

Cranswick expects the deal to be “modestly earnings enhancing” in the current financial year.

It used existing debt facilities to fund the transaction.

The company may pay a further deferred consideration of up to £7.0mln in cash depending on the performance of the business in the 14 months to 30 September 2020.

New facility to boost capacity 

Cranswick is also spending £75mln on a new poultry primary processing facility at Eye in Suffolk, which is expected to more than double its capacity.

Commissioning is expected to take place towards the end of the financial year and is being fast-tracked to support Wm Morrison Supermarkets PLC (LON:MRW), the anchor customer for the new site.

Net debt increased in the first quarter, as expected, but the company said it is in a “robust financial position” with committed, unsecured facilities of £160mln.

"We have made a positive start to the year and our capital investment programme, which is building a platform for future growth, remains firmly on track,” said chief executive Adam Couch.

The outlook for the year remains in line with management's expectations.

Shares rose 3.1% to 2,656p in morning trading.

Quick facts: Cranswick plc

Price: 3100 GBX

LSE:CWK
Market: LSE
Market Cap: £1.61 billion
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