Cranswick sees trade improve as it targets Far East exports

The Hull-based company said greater efficiencies at its abattoirs and an increase in exports to the Far East and the US have helped to offset rising pig prices. Pig meat prices hit a high of 155p per kilo in the summer, but prices have since fallen to around 146p a kilo.

Cranswick said it had seen a rise in prices over the past three weeks, but this is to be expected ahead of the busy festive season.

Jim Brisby, Cranswick’s sales and marketing director, said: “With the higher costs the key issue was the time lag. We had to negotiate our position with retailers. The pricing discussion is now broadly concluded. We’re trading well.”

Pre-tax profits fell from £23.8m to £18.5m in the six months to September 30, despite rising sales, as it struggled to pass on higher pig prices to its customers.

The group said it is “cautiously optimistic” about the future because recent trading has improved and meat-eaters are increasingly turning to pork as a cheaper and healthier option.

Cranswick, which supplies pig products for the Jamie Oliver brand as well as Sainsbury’s and Tesco, said it expects its busiest ever festive season, helped by new products and record demand for premium bacon products.

It said consumers are cutting their average spend at supermarkets and reducing the amount of food they waste in reaction to the tough economic climate.

As a result, retailers are having to resort to slashing prices because ‘multi-buy’ offers, such as buy-one-get-one free deals, are becoming less popular.

Chief executive Bernard Hoggarth said: “The grocery retailers’ growth agenda was not helped by consumers reducing home food wastage by almost 50 per cent and making more frequent shopping trips with a smaller average basket size.”

Fresh pork sales in the first six months rose 14 per cent to £143m.

After the Hull-based fresh pork facility gained United States Department of Agriculture approval in April 2011, ribs are now being exported to the US.

Sales of cheaper cuts, such as heads, tails and feet, to the Far East have also grown strongly and as the area grows in affluence, more expensive cuts such as hocks and shin meat are also becoming popular. Sausage sales were six per cent ahead at £37m.

“The super-premium sausage market continues to grow strongly, helped by the trend of consumers eating out less and buying better quality products for home consumption,” said Mr Hogg- arth.

Bacon sales increased by 30 per cent to £24m. The group has extended its bacon facility at Sherburn-in-Elmet, near Leeds.

“With record demand for the group’s premium bacon products anticipated in the run up to Christmas, the factory is now well positioned to deliver a step change in production volumes,” said Mr Hoggarth.

Underlying sales of cooked meats rose four per cent to £119m.

New Red Lion, Weight Watchers and Jamie Oliver products have all won listings with retailers.

“It would appear that some price focused consumers who have historically purchased sandwiches, have switched to making them at home,” said Mr Hoggarth.

That said, sandwich sales rose three per cent to £25m.

Historically Cranswick has supplied forecourts, airlines and train operators, but it recently won sandwich contracts with two major grocery retailers to supply gluten free products to one and a branded Red Lion range to another.

Sales of continental products fell nine per cent to £39m after one retail customer started sourcing directly

Analyst Clive Black, at Shore Capital, said: “Over the last five years Cranswick has invested more than £100m in its facilities and this investment provides capacity for growth and generally industry leading productivity metrics.

“Such factors are never more important that when markets are tough.”

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