UK pork group Cranswick has said it is open to making more acquisitions and will continue to chase opportunities for growth in a bid to develop the business further.
Cranswick this morning (20 May) saw its share price rise as it reported an 8% increase in adjusted pre-tax profit and 7% growth in revenues.
In the firm’s earnings update, chairman Martin Davey said the Cranswick’s “well invested” asset base, providing “efficient means of production and headroom for future growth”, and a “robust” balance sheet should enable it to capitalise on any opportunities that should arise.
Speaking to just-food on the release of the results, sales and marketing director Jim Brisby said the company will expand the business as sales grow.
“There are a lot of businesses we’ve taken in the latter half of last year and a lot of bedding in to do but there are opportunities as part of our five-year plan that we will continue to chase. I can’t be more specific but really it will be more of the norm.
“As we develop our business, accordingly we put our capacity in accordingly. We always have to align our capacity for peak periods, so we move the capacity with the sales. We are always looking [for acquisitions], so we will move as and when we see the right one.”
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By GlobalDataCranwick last month acquired pig breeder East Anglian Pigs for an undisclosed sum, and last July expanded its presence in the cooked meats category with the acquisition of Kingston Foods.
The company said today investment in the business contributed additional capacity and operating efficiencies, which enabled it to absorb some of the inflationary pressures within the supply chain.
UK pork rearers have been hit by rising on-farm costs, driven in particular by a massive jump in feed prices caused by poor grain harvests. These costs have slowly been passed down the supply chain: Cranswick has faced “record” pig meat prices, but said today that the costs had been met with “positive” action by the group, its producers and retail customers.
Brisby sounded a confident note for remainder of the year. “It’ll be interesting to see how the market plays out this year. We traditionally see a rise in pig prices at this time of year anyway but we’re not forecasting the sharp rises we experienced last year. It should be more subdued this year. Beyond June will be something more of the norm, if you like.”
Brisby said the key to managing prices will be to remain in active dialogue with retailers.
“It’s all about how close we are to the customers and how close they are to the supply chain as well. It’s about closely managing and working in a cooperative fashion to get these [prices] fed through promptly as and when it’s needed. That’s how we managed to do it last year without a major fall out,” Brisby said.
“We are working more and more closely with the supply chain, we are very close to the producers and so we don’t see any immediate concerns. Yes we’ll see some price rises in the coming months but nothing much beyond that really.”
Cranswick’s annual results came in ahead of analyst expectations. Shore Capital analyst Darren Shirley said the results benefited from “strong” revenue growth amidst “continuing subdued market conditions”.
“It is worth noting, in our view that we estimate Cranswick’s H2 organic revenue growth was close to double digit, in a UK food market still suffering from falling volumes, we view this as an outstanding performance. We expect 2013 to be another year of investment across the group, forecasting GBP30m capital expenditure for the year.”
Cranswick’s share price was up 1.6% to 1104 pence at 15:28 BST today.