Uncertain UK market, weak export prices hit Cranswick first half
Cranswick
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An uncertain UK market and softer pricing conditions in key Far Eastern export markets led to a fall in first half pre-tax profits at supermarket food supplier Cranswick.
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Revenue rose to £719.2m from £714.6m) while profit before tax slipped 4.3% to £42.6m, the company said on Tuesday.
Adjusted profit before tax was up marginally to £44.8m from £44.4m. The interim dividend per share was increased by 5.3% to 15.9p.
Chief executive Adam Couch said the first half performance was in line with expectations and expressed confidence in full year prospects, but sounded a note of caution over Brexit as Prime Minister Theresa May faced an uphill struggle to get her deal with the European Union through parliament.
“Along the way there will inevitably be challenges to be confronted and overcome, not least of which is the uncertainty created by the ongoing Brexit discussions,” he said.
“The sooner there is finalisation and clarity on this then the better for all.”
Cranswick, which supplies meats to retailers' own labels including Sainsbury's 'Taste The Difference' and Tesco 'Finest', said total fresh pork revenue fell by 5.5% per cent reflecting lower wholesale and export demand, with “slightly fewer” pigs processed as a result.
However, retail sales increased by 4.7%, underpinned by strong volume growth, as the football World Cup and summer weather combined to deliver a strong barbecue season as well as good growth in added value convenience ranges launched with key customers.
“This growth was offset by lower sales of roasting joints and other more traditional products. Overall our retail sales growth was still comfortably ahead of the wider fresh pork retail market performance,” the company said.
Total pork export revenue fell by 2.6% reflecting lower overall volumes, although export volumes to key Far Eastern markets were up 12.4%, driven by approval for direct export to China from the company's Ballymena site in Northern Ireland.
Volume gains in these markets were, however, offset by softer pricing, Cranswick said, adding that the recent outbreak of African Swine Fever (ASF) in China was disrupting local pork markets and industry.
ASF was also detected in the feral pig population in Belgium in mid-September. Cranswick said the region has been quarantined and intensive effort to eradicate ASF sources had so far been successful.
"We remain on full alert with heightened biosecurity protocols in place," the company said.
Couch said Cranswick's capital investment programme remained “firmly on track”.
“During the period we spent a record £41m across our already well invested asset base as we build a platform for future growth,” Couch said.
"Our new £27m Continental products facility in Bury, Lancashire was commissioned during the period. We have also invested heavily in the group's agricultural operations and construction of a £60m class-leading, primary poultry processing facility in Eye, Suffolk, which is due for completion towards the end of the next financial year, is now well underway.”