Upmarket food firm Cranswick has invested a record £41m to boost future growth despite uncertain UK market conditions.
The Hull-based firm faced softer pricing in key export markets, leading to flat half year profits, although revenue rose to a record £719m.
The group’s CEO Adam Couch said the continued uncertainty over Brexit is driving volatility in currency markets and uncertainty within the European labour market. He said the key issues are access to and the cost of labour, the potential for import tariffs on EU pork and continental food products and the valuation of sterling versus the euro and other world currencies.
“My biggest concern is about immigration,” he said.
“We greatly rely on our international workforce, who are very valued. We encourage our international colleagues to remain in the UK. Some 65 per cent of our staff are international and they are a great, skilled workforce.”
Despite the uncertainties caused by Brexit, Cranswick has invested a record amount of money in its factories and is increasing its own farming capacity to cope with future volatility.
Mr Couch said that continental products revenue grew strongly over the six months to September 30, with the new facility in Bury providing additional capacity for new olive business won in the period and increased sales of pre-pack corned beef.
Demand for summer eating ranges drove a 10 per cent year-on-year increase in the overall market for olives and continental meats, with the continental business outperforming the wider UK retail market.
The new facility in Bury, which increases Cranswick’s capacity by 70 per cent, has been completed with capital expenditure of £3m during the period to complete the £27m project.
Mr Couch said the £60m investment in a new poultry processing facility in Suffolk is progressing well. Capital expenditure included £11m on the project, with the steelwork frame now under construction.
The factory, which will be capable of processing 1.2 million birds per week, will be operational towards the end of the next financial year. Mr Couch said the facility will be the first of its kind 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.
Cranswick has also invested heavily in increasing its farming capacity with three farms in Yorkshire and Lincolnshire.
The group is gearing up for its key Christmas period and best sellers include an M&S Best Ever Steak Pie, made with slow cooked British beef, smoked bacon lardons and caramelised onions. The pie, which is made at Cranswick’s Yorkshire Baker site in Malton, has become the fastest selling product in M&S’s history.
Other top sellers are expected to include sausage garlands, pigs in blankets and stuffing.
Adjusted pre-tax profit over the six month period was 0.9 per cent higher at £44.8 and the group has raised its interim dividend by 5.3 per cent to 15.9p per share.
Analyst Darren Shirley at Shore Capital said: “We view Cranswick as a class act reflecting high standards, an excellent supply chain, a fine product portfolio and an industry leading plant network supported by continued high levels of investment in pork and now poultry.
“Such investment has and is creating the capability and capacity to deliver considerable growth in the medium-to-long term, supported by outstanding management, excellent cash generation and high returns.”
Analyst Charles Hall at Peel Hunt said: “Within the categories, poultry, continental and sausage performed well, but volumes reduced in fresh pork, bacon, cooked meats and pastry. The second half should be helped by higher pig prices in China due to African Swine Fever.”