Revenues at Cranswick plc increased by 6.6% to £1,069.6 million and overall sales volumes were up by 12% in the year ended March 31, 2016, according to the compay’s audited preliminary results.
Growth was supported by the contribution from the Benson Park poultry business that was acquired in the second half of the previous financial year, but underlying revenues for the core pig operation also grew by 4.7%, with sales volumes ahead 10%.
Adjusted group operating profit increased by 12.8% to £66.2 million and adjusted group operating margin improved to 6.2% of revenue. The improvement in the operating margin reflected lower pig prices, the positive contribution from Benson Park, an improved performance from Cranswick’s pastry business and a tight focus on cost control and operational efficiencies across the group.
The company said its strategy of targeting the premium tiers of the product categories it served continued to underpin the success of the business. In overall terms, volumes in the categories in which the company operated were either growing slowly or in were in modest decline, but the super-premium segments of the categories continued to outperform the rest of the market. Good examples of this trend were super-premium bacon and sausages which, according to recent market data, were showing strong volume growth.
Cranswick said pig prices remained relatively stable during the first half of the financial year, compared to the volatility experienced in the previous three years, but then fell sharply in the second half and in particular in the final quarter of the year. The UK pig price was, on average, 17% lower than the year before, the company added, and the differential between the UK price and its European equivalent had now narrowed to a more sustainable premium of 10 to 15%, reflecting the UK’s unique global position in terms of outdoor pig production.
The Wayland and Wold farming businesses supplied approximately 20% of the group’s British pig requirements during the year, making Cranswick the third largest pig producer in the UK. Representing 6% of the total UK pig herd, more than 80% of the pigs produced from the two herds were bred outdoors, the company said, providing a complete farm-to-fork solution for the premium pork ranges of the group’s two largest retail customers.
Provenance and end-to-end supply chain integrity were a key differentiator enabling the group to lock in key long-term retail relationships, and improvements in productivity and prolificacy – together with lower feed costs – helped to partly offset the impact of lower pig prices during the year.
Cranswick reported that total export volumes grew by 23% in the year to the end of March. Volumes were up 32% in Far Eastern markets, 7% in the US and 8% across the rest of the world. The company said it was now shipping more than 1,000t of product to the Far East each week, accounting for more than 50% of all pig meat exports from the UK to this part of the world.
Further opportunities were being explored, and the range of products being exported was continually being developed and broadened.