Cranswick warns of challenging conditions ahead

Cranswick makes upmarket sausages for major UK supermarkets
Cranswick makes upmarket sausages for major UK supermarkets
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​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 price​s​ 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 p​erformance 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​ invest​ing​ 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 ​b​oard is confident that continued focus on the strengths of the ​c​ompany, 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 ​g​roup over the longer term.​"