Cranswick reports better operating margins

Cranswick plc is now producing 20-25% of its weekly pig requirement in-house, the company has revealed in its latest trading statement.

The processor said total sales for the three months to December 31, 2013, were 14% higher compared to the same period last year thanks to the on-going popularity of pork products. Operating margins were better too.

Cranswick added recent market data highlighted growth in pork consumption during the third quarter, particularly of roasting joints, with this momentum maintained over the Christmas trading period. Both the versatility and the low relative price of pork compared to other proteins were central to this positive trend.

The company also said that input costs remained at record highs during the period, but efficiency improvements, internal pig production and constructive pricing discussions with customers helped to partially mitigate the full impact. Consequently, there was some recovery in operating margin in the third quarter compared to the first half, although for the year to date it remains below that achieved in the same period last year.

Cranswick confirmed further strategic investment in its pig breeding and rearing activities through the purchase of two additional breeding units. The total number of pigs produced internally is now 20-25% of weekly requirements, which the company said gave the group greater control over a robust and integrated supply chain, with a clear focus on premium British ingredients and, in addition, has offset some of the impact of higher input costs.

Following the expected seasonal increase in working capital, the substantial uplift in sales, further investment in the Group’s pig breeding and rearing activities, and on-going capital expenditure, net debt increased from £37 million to £55 million during the quarter, with the operating cash outflow in the period following a similar pattern to previous years.

Notwithstanding the investment in the group’s pig rearing and breeding activities during the year, net debt was just £7 million higher than at the equivalent quarter end last year.

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