Cranswick PLC (LSE:CWK) has left its full-year guidance unchanged after its first-half profits came in ahead of some analysts’ expectations.
The food producer said it saw strong year-on-year revenue growth of 6.4% in the 26 weeks ended 25 September, with a significant increase in poultry sales following the expansion of its Eye poultry facility.
Revenue rose 6.4% to £993.1mln from £931.6mln in the corresponding period of 2020, which means the growth rate slackened from 9.6% in the first quarter.
Adjusted profit before tax jumped 12.5% to £68.3mln from £60.7mln the year before. Broker Peel Hunt had forecast profits of around £67mln.
Statutory profit before tax improved 17.7% to £63.2mln from the previous year’s £53.7mln.
The adjusted operating margin improved by just over a third of a percentage point to 7.0% from 3.7%.
The company said that unprecedented industry-wide labour and supply chain challenges are being well managed with “excellent customer service levels maintained”, while cost inflation is being proactively handled.
"We continue to invest in the long-term sustainability of our business. We have made excellent headway in delivering our Second Nature sustainability strategy with several major milestones reached during the period. These include achieving carbon neutral status across all 14 of our eligible manufacturing facilities and committing to purchasing 100% deforestation-free soya which we expect will result in a c.20% reduction in carbon compared to the previous system,” said Adam Couch, Cranswick’s chief executive officer.
“We also continue to invest heavily in our people, in our product range and in capacity and capability across our asset base. Our new £31mln Breaded Poultry facility is on track for completion in early FY23 [fiscal 2023]; when completed, this will be our fourth new-build production facility commission in the last five years with a combined total investment of over £180mln,” Couch noted.
Ross Hindle, an analyst at research house Third Bridge, said the UK meat and poultry sector is currently facing “a triple whammy” of rising raw material costs, labour shortages, and CO2 disruptions and this is creating immense pricing pressure.
“Our experts warn double-digit price increases are likely to hit consumers over the months ahead in certain product categories. Speciality products such as pigs in blankets and chicken kebabs could also be off the menu as labour-intensive products are ditched by manufacturers short of staff,” Hindle said.
“Specialists believe Cranswick is in a slightly better position to its competitors, thanks to newer manufacturing sites and more automated processing plants,“ he added.
Shares in Cranswick were up 1.5% at 3,688p.