Cranswick lifts 2020 expectations as lockdown brings 20pc sales hike

Pork giant Cranswick has made a strong start to 2020, with first quarter results showing like-for-like sales up almost 20 per cent as Britain cooked from home through the coronavirus pandemic.

Revenue was up 19.2 per cent in the first three months, with the financial year kicking in just days after lockdown was declared.

Acquisitions in the past year boosted that figure to 24.8 per cent for the Hull headquartered operator, leading the firm to raise expectations for the full year.

Adam Couch, chief executive of Cranswick, said: “Our teams across the business have responded brilliantly during these extraordinary and unparalleled times and I would like to thank them for their incredible support and hard work which has enabled us to continue to deliver premium food products with outstanding service to our customers.

“We have made a strong start to the year.  Whilst we remain cautious about the longer-term economic impact of Covid-19 and the uncertainty surrounding the ongoing Brexit negotiations we are well positioned to address these challenges.

“Our positive momentum reflects the continued investment we make across our asset base and the quality and capability of our colleagues across the business.” 

Sausage production at Cranswick.
Sausage production at Cranswick.

The £1.6 billion firm was formed in the early 1970s by East Yorkshire farmers, and now operates 12 added value processing facilities, serving supermarkets, premium and discount retailers, while also having a strong presence in the food-to-go arena. It employs almost 12,000 people across the UK, 4,500 of which are in the five sites in Hull.

Mr Couch said: “As a result of the current shift towards greater in-home consumption, retail demand has been exceptionally robust. This, together with increased poultry sales from the new Eye facility, which continues to perform strongly and the benefit from new contract wins, have all comfortably offset lower food service revenue.

“This positive performance has, to date, continued during the second quarter of the financial year.”

He told how colleague safety and wellbeing remain the priority, with the continuance of a  “proactive and comprehensive Covid-19 action plan centred on keeping our colleagues safe, feeding the nation and supporting our local communities”.

Mr Couch said enhanced safety measures swiftly introduced in March are now well embedded and have enabled all sites to remain fully operational and to meet increased levels of retail demand.

A £500 bonus was paid to all site-based colleagues to recognise their essential key worker status and valued contribution throughout the pandemic, while frontline NHS staff, the elderly and vulnerable, as well as charities in the areas it operates, have all been supported.

Cranswick is a FTSE 250 food manufacturer based in Hull
Cranswick is a FTSE 250 food manufacturer based in Hull
(Image: Cranswick)

He added that the robust financial position and strong trading had enabled Cranswick to continue operating well within banking covenants and without need for government assistance.

Investment to increase capacity and add new capabilities while driving further operating efficiencies continues, however capital expenditure is anticipated to be lower than the record £101 million spent in 2019/20.  

It saw the completion of the £78 million poultry primary processing facility in Eye, Suffolk, referenced in his remarks.

Strong cash generation has seen net debt fall.

Looking ahead, Mr Couch said: “Following the exceptional demand experienced in the first quarter, retail volumes are expected to begin to normalise through the remainder of the year as consumers gradually return to eating out of home.”

The FTSE 250 Index listed entity, with a market capitalisation of £2.13 billion, saw shares surge 6 per cent from 3,824 to a year high 4,126 in the morning’s trading as investors reacted positively.