Leading food producer Cranswick has reported a fall in revenue and warned that next year's operating margins are likely to decline, reflecting the "potentially challenging" commercial landscape, together with start-up and commissioning costs.
The Hull-based firm saw strong growth in poultry and continental products in the three months to December 31, but this was offset by lower sales from pork products, leading to a 2 per cent fall in revenue in the run up to Christmas.
UK pig prices continued to fall during the period, ending the quarter 7 per cent lower than at the same stage last year. This downward trend was reflected in selling prices.
Despite this, the group said its performance over the festive period was robust, reflecting a well-executed Christmas plan, strong cost control and operational efficiencies.
The group cheered investors with the news it has agreed a long term supply agreement with Bradford-based supermarket chain Morrisons to supply fresh poultry from Cranswick's new Eye facility in Suffolk. It will also start supplying Morrisons with a range of cooked poultry products its poultry facility in Hull.
Analyst Darren Shirley at Shore Capital said: "Whilst downgrades are undoubtedly disappointing, our new 2021 forecasts demonstrate that Cranswick is well placed to drive growth over the medium to long term.
"We continue to view Cranswick as a high class operator with an innovative and expanding product portfolio (focused on premium categories) which is underpinned by a very well invested, industry leading supply chain and manufacturing infrastructure."
Cranswick said it is investing at record levels to increase capacity, add new capability and drive operating efficiencies, whilst maintaining industry leading standards at all its facilities.
"Notwithstanding these short-term challenges, our new Eye and existing added value, poultry facilities and our broadening customer base, provide a solid platform to further develop our poultry business and drive future growth in this attractive and expanding protein category," the group said.
"The board is confident that continued focus on the strengths of the company, which include its long standing customer relationships, breadth and quality of products, robust financial position and industry leading asset infrastructure, will support the further successful development of the group over the longer term."