- Trading ahead of forecasts
- Half-year seen up on 2023
- Full-year profit top end of range
Food producer Cranswick (CWK) has once again seen trading top expectations due to strong demand leading it to raise its half-year and full-year earnings guidance.
The shares leapt 280p or 6% to £49.95 taking them not only to the top of the FTSE 250 leader board but to an all-time high.
ONWARDS AND UPWARDS
Cranswick, based in the East Riding of Yorkshire, supplies fresh pork, poultry, convenience and gourmet products to major UK supermarkets and the ‘food-to-go’ industry.
In recent years the firm, which since 2012 has been led by chief executive Adam Couch – a 30-year veteran of the company – has expanded into pet food and runs a significant food export business.
Cranswick shares have been among the best performers over the last quarter of a century with an average annual return of just under 15% as Shares revealed in our 25th anniversary issue earlier this month.
In its first-half trading update, the firm said demand since the end of the first quarter had been stronger than previously expected ‘underpinned by continued robust volume growth in our core UK food business’ and a positive ongoing contribution from its expanding pig farming operations.
As a result, first-half results are seen ahead of the same period last year and full-year profits are expected to be ‘towards the upper end’ of current forecasts of between £179 million and £192 million.
EXPERT VIEWS
Commenting on the update, Andrew Wade at Jefferies said it was ‘encouraging to see Cranswick's substantial ongoing investments (e.g. Hull, Worsley, pig herd) translating into volume growth’ which with a return on capital employed of around 20% as the projects mature ‘should support ongoing outperformance of growth expectations’.
AJ Bell investment director Russ Mould pointed to the fact Britain is clearly still a nation of meat-eaters, despite more people shifting towards vegan and vegetarian diets.
‘Cranswick will be aware of shifting consumer preferences and has some diversification built into its business. A pet food arm and a growing houmous operation, including a new facility in Manchester, offer some comfort if more people start to cut down on meat.
‘However, bangers and pork chops are really the company’s bread and butter and it’s hard to see these disappearing from shopping baskets any time soon’, added Mould.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Ian Conway) and the editor (Martin Gamble) own shares in AJ Bell.
