Heatwave sends sales at Cranswick soaring

The Hull-based firm said customers can’t get enough of its Classic Lincolnshire, Cumberland and Toulouse sausages as they light up the barbecue amid the exceptionally warm May weather. Burgers have also flown off the shelves, particularly gourmet ones with onion and various cheeses.

Cranswick’s chief executive Adam Couch said: “The barbecue season has been helped by the weather and last weekend’s events - the Royal Wedding and the FA Cup Final.

“Keeping up with demand was a struggle, but we did it. We see very strong sales this Bank Holiday weekend.”

The group said it has benefited from a number of new contract wins with the big grocers and said it has invested a record £59m in its operations. It plans to invest a further £80m this year.

“Poultry is particularly strong,” said Mr Couch.

“We anticipate that the site in Hull will need further investment.”

Analysts described the results as exceptional as adjusted pre-tax profit rose 22 per cent to £92m in the year to March 31. The group reported record revenues, up 18 per cent to £1.46bn.

Darren Shirley at Shore Capital said: “Cranswick’s results confirm a year of exceptional progress, with 52 week sales growth of 15.7 per cent aided by new business wins and a robust inflationary contribution. Profit growth was also exceptional.

“Group cash generation was outstanding with year-end net cash of £20.6m reported. Looking into 2019 we leave our forecasts broadly unchanged,”

Fiona Cincotta, senior market analyst at City Index, said: “Cranswick has delivered the goods yet again, as Britain’s appetite for bacon and sausages shows little sign of abating.

“What’s particularly pleasing about this result is the improvement in margins. Falling pig prices have helped, but the company is also starting to enjoy the fruits of its previous efficiency investments.

“With Sainsbury’s bid for Asda potentially putting a squeeze on suppliers, Cranswick’s investment drive has proven extra timely.”

Asked whether he was concerned about the Sainsbury’s/Asda merger, Mr Couch said: “We look at it in a glass half full way. We deal with both firms and think there will be opportunities. We are broadly positive.

“Are we worried about being squeezed? We are always worried about that issue.”

The company’s total export revenue, of which a large share comes from its pork exports to China, surged 30 per cent.

“It’s fair to say the Chinese market may have come off in price, but volume is good,” said Mr Couch.

The group also exports to the US, Japan, South Korea, Australia and new Zealand.

Cranswick said the outcome of the UK referendum on EU membership and the subsequent uncertainty over the nature of the UK’s exit from the EU is driving volatility in currency markets and uncertainty within the European labour market.

Asked whether the group has seen any impact from Brexit, Mr Couch said: “Working out the machinations and different permutations would mean we spend all our time doing modelling. I’d like to think a deal would be done. We are exiting. We have to abide by that.”

Cranswick said it would increase the final dividend to 38.6p per share from 31.0p.

“It’s strong dividend growth reflecting strong revenue growth,” said Mr Couch.

“We’ve had 28 years of unbroken revenue growth. We are very proud of that.”