Analysts have lowered their forecasts for Cranswick on the back of forecast rises in the price of pigs

Analysts have lowered their forecasts for Cranswick on the back of forecast rises in the price of pigs

Shares in meat processor Cranswick have continued to fall today (4 April) as analysts have lowered their 2012 forecasts for the UK meat processor.

In an analyst note sent out today, Shore Capital analyst Darren Shirley reduced his 2011/12 current pre-tax profit forecast for Cranswick by 6% to GBP47m (US$75.7m) and EPS expectations by 4% to 73.8p a share due to the "expectation of rising pig prices in the second half and the tougher retail trading environment".

Similarly, Investec analyst Nicola Mallard sounded a cautious view on the processor's forecast also trimming her profit before tax estimate for the coming financial year, down from GBP48.3m to GBP47m.

Shares in Cranswick were down 4.51% to 793.5p a share at 15:11 BST as the manufacturer suggested that the coming year might be "more demanding than usual".

In a trading update, the meat processor said that it expects the "difficulties facing the UK consumer and the dynamics of the competitive UK market" may be more "demanding than usual". However, it added that its "well invested" asset base, "strong" range of products, "experienced" management team and "robust" financial position mean that it is "well positioned" for long-term growth.

Mallard said the markets Cranswick operates in were "more challenging" during the fourth quarter, with its flat sales reflecting the "difficulties facing UK consumers" and increased levels of re-tendering activity which has "resulted in some modest volume loss, which has offset steady growth elsewhere".

Mallard is also "assuming a cautious view on margins", saying that they tend not to improve when there is any degree of re-tender activity, which "could be compounded by the possibility of higher pig meat prices." She added that farmers have been losing money on pigs for "several months" and that the rises may come through "perhaps in the latter half of the year".

While both analysts were cautious about the processor's immediate future, both were positive about its long-term prospects with Mallard maintaining her buy recommendation, while Shirley did not provide a recommendation, he said that "stocks like Cranswick "should form a core part of a UK mid-cap portfolio".