- Price hikes help annual sales 15.7% higher
- Dividend raised for 33rd consecutive year
- Pets at Home supply partnership revealed
Shares in Cranswick (CWK) fattened up 5.7% to £33.18 after the premium food producer delivered robust full-year results in the face of stiff cost and consumer headwinds and raised the dividend for an impressive 33rd consecutive year.
There was relief among investors as the fresh pork-to-poultry producer insisted cost inflation continues to be ‘well controlled and mitigated’, and excitement as it announced a supply partnership with Pets at Home (PETS) which should accelerate the growth of Cranswick’s rapidly-developing pet food business.
LARGER, MORE DIVERSE, BETTER EQUIPPED
Despite unprecedented cost inflation and with consumers pulling in their horns due to the cost-of-living crisis, Cranswick served up a slightly better-than-expected 2.3% increase in pre-tax profit to £140.1 million for the year ended 25 March 2023.
Total revenue rose 15.7% to £2.32 billion thanks to strong growth in all categories combined with price increases to recover cost inflation.
Like-for-like sales growth was similarly juicy at 14.4%, although volumes did decline by 1.4% due to lower Far East export volumes as China remained in strict lockdown for much of the year.
‘We have successfully navigated three years of unprecedented disruption and uncertainty and we now have a much larger, more diverse, and better equipped business, which is primed to deliver the next phase of growth,’ insisted CEO Adam Couch, adding that Cranswick has made ‘a positive start to the new financial year.’
Following another year of robust cash generation and a fall in net debt, Cranswick raised the final dividend by 5.8% to 58.8p, taking the total dividend 5% higher to 79.4p.
This marked 33 years of unbroken dividend growth, which Shore Capital described as ‘a stunning achievement and testimony to great leadership’.
PARTNERING WITH PETS AT HOME
The FTSE 250 food producer also revealed a new supply partnership with Pets at Home which represents an exciting step forward for the emerging Cranswick Pet Products division.
Under the partnership, Cranswick will supply the UK’s pet care leader with dry dog kibble under the Wainwright’s and Step Up to Naturals brands and the deal will see Pets at Home becoming the lead customer for the division.
‘Although our pet food business currently makes a very modest contribution to group revenue and earnings,’ explained Couch, ‘we are very excited about the opportunity to grow our presence in this attractive, large and fast-growing market.’
Indeed, house broker Shore Capital noted the UK pet food market is reported to be worth £3.9 billion and grew by more than 14% in 2022.
THE SHORE CAPITAL VIEW
Following the results, Shore Capital upgraded its year-to-March 2024 pre-tax profit forecast to £145 million, implying a year-on-year increase of 3.5%, and sees Cranswick cooking up a rise in profits to £155.7 million in full year 2025.
‘Cranswick is a very high-class operator in our view,’ commented the broker, ‘with an outstanding management team and capability that has come to the fore in recent times through Covid and the broad array of cost challenges that have emerged since (labour, supply chain, energy, raw materials etc).
‘Sustained and broadly based investment has also resulted in an industry-leading asset base and an increasingly diverse range of growth opportunities across pork, poultry, continental foods and more recently in the exciting pet food market.’
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