Upmarket sausage and bacon producer Cranswick reported record half year revenues and said it is well placed for Christmas as it plans to double production of pigs in blankets (sausages wrapped in bacon).
The Hull-based firm said it is well placed to ride any consumer downturn having spent £200m over the past eight years on its production sites to make them as efficient as possible.
The group’s CEO Adam Couch said: “We are not one of the doom and gloom merchants. There have been a number of crises over the past 15 years. We tend to work through them.”
Asked about expected price rises next year following the fall in sterling after the Brexit vote, he said: “We’ve got good customer relationships so we can share inflation and deflation. We will look to mitigate price rises where we can.
“We have some of the best facilities, but there is an inevitability about food prices rising.”
Cranswick has diversified over the past few years into chicken and poultry in order to expand its offering and make the most of the popularity of the “alternative white meat”.
“Poultry is a versatile and very healthy option,” said Mr Couch.
“According to the latest Kantar data, we are seeing double digit growth in poultry.”
In addition chicken prices have been relatively benign although they have increased more recently.
Asked about the likely impact once the Government triggers Article 50 and Britain starts the two year process to leave the EU, Mr Couch said: “Our only concern would be labour and staff coming in from abroad. It would help to have clarity from the Government although we are well placed.
“EU nationals make up between 35 and 60 per cent of our workforce and may be beyond that in certain areas. They are extremely valued colleagues.”
Cranswick’s strength as an exporter is helping to mitigate economic issues at home.
“We are very strong on exports. We represent well over 50 per cent of all pork exports,” said Mr Couch.
“Far East sales are up 83 per cent in value terms and up 37 per cent in volume terms.”
Analysts welcomed the results. Darren Shirley at Shore Capital said: “Cranswick’s excellent first half performance reflected a further acceleration of broad based volume growth across the business, as the contribution from new contract wins with key customers gathered momentum, momentum we expect to be at least sustained through the second half.
“Organic volume growth is reported at 16 per cent, which implies close to a 20 per cent increase through the second quarter given the 12 per cent growth already reported for the first quarter.”
Cranswick’s revenue rose 16 per cent to £581m in the six months to September 30, a new record for the firm.
Underlying revenue rose a credible 8 per cent and adjusted pre-tax profits rose 24 per cent to £38m.
Cranswick has raised the dividend by 13 per cent to 13.1p and net debt has been reduced from £4.8m to £2.9m.
Mr Couch said the group is well prepared for the second half.
“We are facing some inflationary headwinds,” he said.
“We will spend £50m on infrastructure. We are not blind or ignorant to inflationary pressures, but we’ve been through it before.”
Looking towards Christmas the group will produce 40 million pigs in blankets this year, double the number last year. In addition it has high hopes for its poultry operation as it sells turkey to sandwich chains such as Pret A Manger.
The group reported a strong contribution from Crown Chicken following its acquisition in April and said integration is proceeding to plan.