Cranswick delivers strong update as it announces £44m acquisition

The Hull-based firm said revenue rose 1.5 per cent in its first quarter, against strong numbers during its first quarter in 2018.

Far East export revenues were strongly ahead, reflecting increased demand from China following the widespread outbreak of African Swine Fever in the region.

Cranswick said the UK pig price rose 10 per cent during the period, although the average price across the quarter was still below the price in the equivalent period last year.

The firm also announced the £43.5m acquisition of a leading Mediterranean food products business, Katsouris Brothers, which processes and supplies Continental and Mediterranean food. The business operates from two facilities in North London and employs a total workforce of approximately 250.

Costas and Louis Constantinou, managing director and commercial director respectively, will remain with the business.

Cranswick said they have a wealth of experience in this “attractive and fast-growing sector”.

For the year to June 30, Katsouris announced revenue of £68m and adjusted earnings of £6m. It has gross assets of £30m and Cranswick expects the transaction to be modestly earnings enhancing in the current financial year.

The net cash consideration of £43.5m was funded from Cranswick’s existing debt facilities. A further deferred contingent consideration of up to £7m in cash may become payable dependent on the future performance of the business in the 14 month period to September 2020.

Cranswick said investment is at record levels to increase capacity, add new capability and drive operating efficiencies, whilst maintaining industry leading standards at all its facilities.

It said investment in the new £75m poultry primary processing facility at Eye in Suffolk, which will more than double existing capacity, is progressing to plan.

Commissioning is expected to take place towards the end of the financial year and is being fast-tracked to support the anchor customer for the new site, Morrisons.

It said the “world class operation” is the first new primary poultry plant to be constructed in the UK for almost 30 years and will, when fully commissioned, be the most technologically advanced and efficient facility in the UK industry, incorporating the highest animal welfare standards.

Adam Couch, CEO of Cranswick, said: “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. We continue to make pleasing progress on the new Eye poultry facility and our new continental products facility in Bury is now performing strongly and in line with the original business case.

“I am delighted to announce the acquisition of Katsouris Brothers, a leading supplier of Continental and Mediterranean food products. This acquisition strengthens our existing continental products business and broadens our offering in a number of fast-growing, plant based, non-meat product categories.

“The family behind Katsouris Brothers has created long lasting and sustained relationships with suppliers and the business has a strong customer base. We look forward to building on this and continuing to invest in the facilities and the team, over the years ahead.”

Cranswick said the outlook for the underlying business in the current financial year remains in line with management’s expectations, with the enlarged group expected to benefit from the acquisition of Katsouris Brothers.

"With experienced management at all levels of the group, a strong range of products, a well-invested asset base and a robust financial position, the board is confident in the continued long-term success and development of the business," said Mr Couch.