Cranswick wary as profits reach record

PORK producer Cranswick announced record annual profits, but warned of tough times ahead as consumers grapple with tax rises, spending cuts and rising raw material prices.

The Hull-based company reported an eight per cent rise in pre-tax profits to £47.1m for the year to March 31 following a four per cent increase in underlying sales to £758m.

But the company warned that sales in first three months of 2011 were flat, reflecting the difficulties facing UK consumers.

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The group enjoyed strong April trading, in line with booming supermarket sales that month, but this was seen as a one-off.

Cranswick’s sales and marketing director Jim Brisby said: “April was boosted by two bank holiday weekends, the stunning weather and the Royal wedding.”

Following the April blip, he described May sales as “reasonable”.

Cranswick’s newly appointed chief operating officer Adam Couch said: “One inescapable fact is feed price increases. We are now seeking recovery of costs and we are in talks with our customers.”

Mr Brisby added that these talks have to be successful if the pig industry were to have a sustainable future.

“We have got to get money back down the supply chain to pig producers,” he said.

Despite the demanding environment Mr Brisby said there was no sign of customers trading down.

“The consumer is reducing waste and taking advantage of promotions, which have become paramount,” he said. “Premium ranges are not losing market share. People are spending Saturday night at home instead of going out to a local restaurant.”

At the other end of the market he said discount retailers were doing “phenomenally well”.

Cranswick has recently launched a pastry business, starting off with gourmet style, hand-crafted sausage rolls which are being marketed under the ‘Yorkshire Baker’ brand as well as own-label for the big retailers.

The plan is to launch a range of pastry products. The next one will be the Yorkish Pasty following Cornwall’s success in banning other counties from calling their pasties “Cornish”.

“The view is that the product we make is every bit as good as the Cornish,” said Mr Brisby. “We use all-butter pastry and it’s a superb product.”

The Yorkish Pasty will go on sale in retailers across the country in six weeks’ time. There will be a traditional meat version as well as a cheese and onion and a curried vegetable version.

The Yorkshire Baker brand joins a growing number of other branded products, which include Jamie Oliver, Weight Watchers, Black Farmer, and Red Lion.

The Red Lion brand, launched last October, generated sales of £12m. These sales generated a significant contribution to Red Lion Foods, which donates 100 per cent of its post-tax profits to armed forces charities and causes.

Fresh pork sales from Cranswick’s two processing facilities based in East Yorkshire and Norfolk grew strongly with the combined revenues rising 17 per cent.

Bacon sales also rose 17 per cent. The gourmet bacon facility near Leeds completed phase two of its development during the year. The site, which produces dry-cured, air-dried bacon, now extends to almost 10,000 square metres.

Sausage sales increased by seven per cent. The extension to the Lazenby’s production facility was completed in the autumn, increasing capacity by 50 per cent and enabling the business to better manage the peak Christmas trading period.

Weekly production during the barbecue season and at Christmas can now approach 700 tonnes.

Sales of Continental products were 14 per cent lower following one customer’s move to a direct sourcing policy, but the group has signed up new customers to replace the business.

Cranswick declared a final dividend of 18.7p, making a total for the year of 27.5p, an increase of 10 per cent on last year.

Cranswick’s shares, which have lost 10 per cent of their value since the beginning of the year, closed up 2.2 per cent last night, a rise of 17p to 783.5p.

The news came as Cranswick announced plans to start exporting ribs to the United States, where the dish is far more popular than the UK.

The export business will prove lucrative for Cranswick but is expected to have little impact on UK farmers as the baby back ribs account for only one per cent of a pig.

Changes at executive level

Cranswick has made a number of new executive appointments.

Yesterday it announced the appointment of Adam Couch as chief operating officer.

Mr Couch joined the operational side of the fresh pork business in 1991 after graduating with a degree in finance and accountancy from the University of Hull.

He was appointed to the board in 2003 and is currently managing director of the fresh pork business.

Jim Brisby was appointed to the board as sales and marketing director during the year.

Mr Brisby joined Cranswick 16 years ago after graduating in Business Management from UMIST.