Cranswick lifted by big increase in demand for better bacon

The Hull-based group saw a 70 per cent increase in bacon sales over the past three months as customers switched from cheaper water-injected bacon to more expensive air-cured bacon and gammon.

Chief executive Bernard Hoggarth said gammon sales went through the

roof as people rediscovered the traditional joint.

"Gammon joints have been a neglected area over the past few years," he said. "We're producing air-dried British gammon joints which offer customers top quality meat but a cheaper Sunday roast."

The company, which supplies fresh pork and gourmet sausages to the UK's leading supermarkets, said total sales rose 22 per cent for the year to March 31.

This was excluding sales from the pet products business, which was sold in April 2009.

The increase reflected like-for-like sales growth of 11 per cent and a further contribution of 11 per cent from CCF Norfolk.

During the first three months of this year a higher proportion of fresh pork sales were made internally and there was a small reduction in sales of continental products.

Mr Hoggarth said this reduction was due to losing some business with Asda, which is now sourcing more products directly.

"We are already talking to other customers to replace the lost Asda business," said Mr Hoggarth. "But we have just won some new business with Asda in cooked meats and we are talking to them about other categories."

Sales of fresh pork rose 45 per cent, reflecting the contribution from CCF Norfolk.

Sandwich sales were ahead by 18 per cent.

"The sandwich business had the best year for three years and we've had a very good start to the year particularly in trains, airlines and forecourts," said Mr Hoggarth.

Sales of cooked meat rose by eight per cent.

Growth in sausage sales slowed to six per cent, partly due to the poor weather. Mr Hoggarth said that at this time of year, sausage sales are driven by promotional activity and the group is planning more deals in the coming weeks.

The group said that with strong market positions, a broadening customer base and well invested plants, it is well placed to continue its successful development.

Analysts are now expecting the group to announce annual pre-tax profits of around 43m-44m, up from 34.7m in 2009.

The group said that cash generation from operating activities remained strong through the final quarter and net debt should be lower than the level seen a year ago.

The shares closed last night down 2.5p at 813p.

The group intends to announce its preliminary results on May 24.

Alex Sloane at Evolution said he was encouraged that full year results would be at the higher end of expectations, but said the slowdown in like-for-like sales was slightly higher than he had been expecting.

Like-for-like sales grew by 11 per cent, down from 17 per cent the previous year.

This was partly due to the loss of the Asda business, the poor winter weather and lower pig meat prices.

Mr Sloane said: "Longer term we remain confident Cranswick can continue to capitalise on ongoing industry consolidation in the UK pork market and grow its share within major retail customers which should enable the company to maintain a strong top line performance."

Damian McNeela at Panmure said: "We continue to expect Cranswick to deliver further revenue growth over the medium as it broadens its customer base. We reiterate our "buy" recommendation and 880p price target."

Earlier this year Cranswick set up a joint venture with celebrity TV chef Jamie Oliver to launch a range of his own-brand bacon, sausages, fresh pork and handmade Italian pasta.

Cranswick will provide all the meat, and pasta for Jamie Oliver's range of fresh pork joints, pork steaks, marinated ribs, bacon, Italian charcuterie and fresh pasta dishes.

There will also be a children's sausage range.

Major supplier of sausages

Cranswick completed its 17.2m takeover of rival pork supplier Bowes of Norfolk last June.

Cranswick took on the Bowes pig-meat processing arm, which employs 620 people, but sold the company's pig-rearing operations to a team consisting of members of the Bowes' family and management.

The two businesses have maintained a supply agreement

Cranswick supplies Sainsbury's Taste the Difference range while Bowes supplies fresh pork cuts and joints to Tesco.

Cranswick's chairman, Martin Davey, said the acquisition would have no detrimental effect on East Yorkshire farmers as the group planned to increase work with pig farmers in the region.

In addition to providing pork for Tesco's Finest, standard and value ranges, Bowes supplies UK meat manufacturers, which make hams, pies, sausages, bacon and processed meats for retailers and restaurants.