Cranswick snaps up Irish pork farm

Adam Couch, CEO of Cranswick, said the acquisition will provide greater control over the supply chain

Hull-based Cranswick said Dunbia Ballymena is a leading pork processing business which currently employs 360 people and processes around 7,800 UK farm assured pigs each week. It said the acquisition will enhance its pig processing capability and will establish a significant presence for the group in Northern Ireland.

Adam Couch, CEO of Cranswick, said: "This acquisition strengthens our UK pork processing business and provides us with greater control over our supply chain, ensuring that we can maintain the production and processing of high quality, UK farm assured, pigs which is central to our customer’s requirements.

“The management at Ballymena have created long lasting and sustained supply chain relationships and we look forward to building on this and continuing to invest in the facilities, and the team, over the years ahead."

He said that Dunbia Ballymena operates from a modern, purpose built facility in Country Antrim, Northern Ireland and has a strategic, well-established supply chain with strong links to the local farming community.

In the year to March 29, the Northern Irish firm made revenues of £72.4m.

Jack Dobson, executive director of Dunbia Limited, will support Ballymena in a consultancy capacity to help ensure a smooth transition.

The transaction will be funded from Cranswick’s existing debt facilities and is expected to be earnings neutral in the current financial year and earnings enhancing in 2018.

"We welcome Jack and the team at Ballymena to Cranswick and look forward to working with them to develop the business further," said Mr Couch.

Analyst Darren Shirley at house broker Shore Capital said: "The acquisition enhances Cranswick’s pig processing capability and establishes a significant presence in Northern Ireland. We believe the acquisition represents another sensible strategic move from Cranswick by adding a complementary pig production region to its core activities in North Yorkshire and Norfolk. "We believe the deal provides both medium-term growth potential and provides Cranswick with greater security of supply of high quality, UK farm assured pigs.

"We also believe that the acquisition of Dunbia Ballymena is excellent news for the Northern Ireland food and agriculture industries. Cranswick is a world class operator that will bring much needed security and growth to the region's most important industrial sector through this acquisition. We would imagine that in due course the farming community will benefit from ongoing investment in the plant, so contributing to the development of the rural economy, particularly in County Antrim and its environs."

Analyst Charles Hall at Peel Hunt added: "Dunbia is a leading meat processor and producer based in Northern Ireland. Cranswick is just buying the Ballymena pork processing facility.

"The products largely go to food manufacturers currently (including Cranswick) and this deal should be seen as broadening the customer base and increasing Cranswick’s supply chain in primary processing. We expect the purchase price to be a relatively modest proportion of sales.

"The main issue for Cranswick currently is rising pig prices, which are now approaching 150p per kilo compared to 112p in February. We are confident that this increase will be passed on, but there is inevitably a delay."

Peel Hunt analysts are predicting a strong first half performance for Cranswick when it reports results on November 29.

However they see a lower second half as margins are hit by the delay in passing on higher pig prices.

They said their increase in forecasts for 2018 demonstrates confidence in Cranswick successfully passing through the higher input cost.