UK meat processor Cranswick today (26 July) admitted its annual profits would be lower than initial expectations, a warning that hit its shares.

Cranswick blamed rising input costs and “extremely challenging” market conditions for the profit warning. Shares in Cranswick had fallen 12.31% to 648.5p at 10:54 BST.

The company did not provide specific estimates for its annual profits but said it “now expects to deliver a full-year result below its original expectations”.

Cranswick said its raw-material costs increased during the first quarter of its financial year. The group warned that a lag in recovering the costs and “other inflationary pressures” would hit operating margins for the first half.

As a result, the company said, operating profit for the first half of the financial year is expected to be lower than the first half of the previous year.

Sales in the first quarter to 30 June were down 2% to GBP195m (US$319.7m). The company said the fall was due to the cooked meats business that was transferred into the Farmers Boy (Deeside) venture it has with Morrisons. On an underlying like-for-like basis, sales were up 5%, Cranswick said.

Click here for the full statement from Cranswick and click here for the views of City analysts on the company’s trading update.