Upmarket bacon to sausage firm Cranswick has seen a 65 per cent leap in export revenue following the African Swine Fever outbreak in China.
The Hull-based firm reported a 94 per cent rise in export revenue to the Far East following the outbreak, which has led to a mass culling of China’s pig herd.
Cranswick said that although conditions in its core UK market remain extremely competitive, the outbreak of African Swine Fever in its Far Eastern export markets has created the opportunity to increase sales into this region on commercially favourable terms.
It anticipates this opportunity may continue in the medium term provided the UK remains free of the virus.
Cranswick’s chief executive Adam Couch said: “Rabobank data indicates that restocking of Chinese herds may take several years.
“Cranswick currently accounts for 60 per cent of all UK pork meat to the region so we are well placed to capitalise on this demand.
“The UK industry remains on high alert with intensive biosecurity protocols in place. We have introduced a range of preventative measures to minimise our exposure to the disease.”
The Chinese pig price has risen 89 per cent year on year and pork meat imports have increased by 72 per cent. EU pork prices remain high, supported by strong export demand, particularly from China.
Mr Couch said African Swine Fever outbreaks continue in domestic pigs in Eastern Europe, but the reporting rate of cases in the wild boar population in Belgium is falling.
“However, we are acutely aware of the impact an outbreak of African Swine Fever would have on the UK pig industry and its ability to continue exporting,” he said.
“We will continue to reach out to our industry bodies and Government agencies to ensure that the risk posed by African Swine Fever to the UK farming sector is fully understood and brought to the attention of the wider public.”
He was speaking as the group announced a robust performance in its first half to September 30. Revenue rose 7 per cent to £770m and statutory pre-tax profits were up 11 per cent to £47m. The group reported record first half capital expenditure of £56m.
“We have again invested at record levels across our asset base to position the business for future growth,” said Mr Couch.
“The Katsouris Brothers business, acquired in July, has been integrated successfully and is performing in line with our expectations.”
The interim dividend will be increased by 5 per cent to 16.7p per share.
When asked whether the weak economic outlook and Brexit uncertainty could lead to a downturn next year, Mr Couch said: “I think that’s fair, but remember that pork and chicken are competitively priced proteins and flavour carriers and so form the basis of many diets.”
Pork and chicken cost less than beef and lamb and have tended to perform well in times of economic downturn.
Mr Couch said the group is bullish about Christmas trading.
“We’re seeing strong demand for festive garnish ranges such as Brie en croute, a foot long pig in blanket and Boxing Day hams,” he said.
“We’re feeling positive.”
Analyst Darren Shirley at Shore Capital said: “Cranswick has issued a robust set of results, which in our view offers the potential for forecast upside, as we move through the financial year, if global pig/pork prices are sustained at current elevated levels.”