- Strong first-half growth
- Dividend raised by 10%
- Full-year outlook confirmed
Leading UK food producer Cranswick (CWK) was the biggest faller in the FTSE 250 mid-cap index, losing nearly 5% despite serving up a tasty 16.5% increase in first-half adjusted operating profit to just shy of £100 million and reiterating full year guidance.
Investors were clearly in the mood for some profit-taking after the seeing the shares gain over 25% since the start of the year, outperforming the FTSE 250 by 20%.
WHAT DID THE COMPANY SAY?
Chief executive Adam Couch commented: ‘We have delivered another strong first-half performance with good volume-led growth through capacity expansion and market share gains from close alignment to our key long-standing customers and a relentless focus on quality and industry-leading service levels.
‘We remain on track to deliver further progress in the second half of the year. Our Christmas order book is strong and demand for our innovative products remains high as the UK consumer continues to appreciate the quality, value and versatility of our core pork and poultry ranges.’
TICKING ALL THE BOXES
The Yorkshire-based pork and poultry producer reported a 5.8% increase in group like-for-like revenue with core UK sales ahead by 6.4% underpinned by 7% volume growth. Group revenue for the 26 weeks to 28 September was 6% ahead to £1.33 billion.
Poultry revenue jumped 14.4% reflecting retail demand from the site’s anchor customer with the Eagle Eye facility running at full capacity, and the division now represents 19.5% of group revenue.
A strong contribution from growth in the group’s pig farming operations, ‘excellent’ capacity utilisation and ‘tight’ cost control led to a 0.67% expansion in group adjusted operating margin to 7.5%.
Return on capital employed increased by 2.34% to 18.7% and strong free cash flow conversion saw net debt fall by £50.1 million to £0.9 million at the period end. The interim dividend was increased by 10% to 25p per share.
Market expectations for full-year adjusted pre-tax profit is between £189 million and £193 million, reflected published updated broker analysis since the half-year trading update on 27 September.
Analyst Darren Shirley at Shore Capital described the half year results and confirmed outlook as ‘top notch.’
‘With considerable growth opportunities across its core UK pork markets, increasingly augmented by farming, poultry, and Mediterranean activities, Cranswick is expected to sustain double-digit EPS growth, excellent net cash generation and attractive high teens returns out for the foreseeable future,’ added Shirley.
