Cranswick beats 'incredibly challenging' labour shortages as revenue jumps

Upmarket food producer Cranswick has reported strong revenue growth despite "unprecedented" industry wide labour and supply chain challenges.

The Hull-based firm, best known for its top of the range sausages and bacon, said like-for-like revenue rose 6.4 per cent to £993m in the six months to September 25.

It said that the unprecedented labour and supply chain challenges were being well managed with "excellent" customer service levels maintained.

Adam Couch, Cranswick’s chief executive, said: "A shortage of skilled butchers and slaughtermen has been one of the biggest challenges that we've faced.

"Fortunately for us, some of the investments we've made over the last few years have mitigated much of that issue. Certainly, we're behind on the number of pigs we'd have liked to process. We're up year on year, but actually down on where we'd have liked to have been.

"We're working with the Government at the moment to try and get these temporary work visas resolved and we're quite confident we'll get somewhere with that over the next couple of weeks."

He said that the Government's decision to grant temporary six month visas will help and Cranswick will fill those vacancies first. However, he called on the Government to introduce longer term visas for skilled workers.

In order to support future strong growth, the firm has invested £41m in capital expenditure across the group’s asset base.

Asked whether there will be a shortage of pigs in blankets over the festive season, Mr Couch said: "There won't be from our point of view. We are still geared up for 60 million pigs in blankets this year.

"What we have seen is an acceleration in demand. We've had strong demand from October onwards and we believe that's down to consumers purchasing ahead of what they believe may be shortages.

"Demand is way ahead of what we would have anticipated so early in the festive season. People are freezing pigs in blankets."

In addition to staff shortages, Cranswick is also facing CO2 shortages. The gas is needed to preserve sausages, bacon and other meat.

Mr Couch said: "Getting through the volume of pigs has been a challenge. We have had CO2 shortages and CO2 increasing costs as well.

"We've mitigated that through the various models that we've got. We have very robust relationships with those CO2 providers. We use three providers in particular so we've not been short at any point.

"We've clearly seen an increase in price, as we have in many other inputs as well. We've had to manage that through the supply chain."

Mr Couch said that price increases are not yet being passed through to consumers, but there has been a reduction in promotional activity.

"There is an inevitability about these price increases having to be passed on at some point to the consumer, but that's a timing issue and it's up to the retailers to determine," he said.

"The labour shortage is the key issue. We're working very closely with the Government."

Cranswick is currently short of around 200 slaughtermen and butchers and 200 packers and other jobs.

The firm reported a significant uplift in poultry sales following the successful capacity expansion at Eye.

It said that cost inflation is being proactively managed and recovered.

Analyst Darren Shirley at Shore Capital said: "In a six month period that has been impacted by well versed challenges from labour availability, logistical constraints, and broad-based inflation (commodities, utilities etc), Cranswick has once again delivered a strong performance, both on a one and particularly a two year basis."