Cranswick recorded a 26% increase in its profits in the latest financial year, as it continued to invest heavily in the business and grow its revenues.
The Hull-based pig and poultry business’s revenue grew by a further 11.9% (11.6% like for like) to £2.6 billion in the 53 weeks to March 30, 2024.
Its adjusted profit before tax went up from 140 million in 2022/23 to £176m in the last financial year, a 26.1% increase, while its adjusted operating margin increased from 6.3% to 7.1%.
Cranswick said its performance reflected a strong contribution from its expanded pig farming operations, tight cost control and robust returns from the effective deployment of capital, as well as effective inflation recovery and volume growth in UK food, which accelerated through the second half of the year.
Its strong performance, building on years of relentless growth, once again delivered a boost to shareholders, as adjusted earnings per share increased by 15.6% t0 242.8p.
The company saw revenue growth across all five of its product categories – fresh pork, gourmet, convenience, poultry and pet foods.
Fresh pork growth
Fresh Pork revenue, which represented 25% of total revenue, increased by 7.7% (6.9% like-for-like), ‘reflecting the further recovery of high UK pig prices’, which peaked at 225.65p/kg in August.
UK fresh pork volumes were strongly ahead of the prior year, offset by lower Far East export volumes, which was 31% down, as both pricing and demand from the key Chinese market remained subdued.
Retail performance was strong with volumes up 4.5% driven by an uplift in retailer promotional plans throughout the year. UK wholesale revenue also benefitted from increased pricing and more volume directed into the UK trade as export demand slowed.
The reporting period covered Cranswick’s £32.8m acquisition of the Elsham Linc indoor pig farming business last year, which substantially bolstered its Red Tractor-assured indoor pig herd and added additional feed milling capability. This business comprises 18 sites in North Lincolnshire, including a feed mill, with 8,000 sows producing in excess of 3,200 finished pigs per week.
The company also acquired a second pig herd during 2023 as part of a wider agreement to lease and operate, on a long-term basis, a fully integrated pig and arable farming enterprise in North Yorkshire
This took its self-sufficiency in UK pigs now over 50% and the company said this ongoing investment in feed milling and pig farming operations is helping to secure its supply of pigs and drive enhanced returns.
In his review of the year, Adam Couch, Cranswick’s chief executive officer, said: “Moving forward, we will continue to invest at pace in our pig farming operations and consider further acquisitions to ensure we have the right quantity and mix of pigs to service our customers’ requirements.”
The company also invested £13.3m acquisition of Froch Foods adding further cooked meat and bacon processing capacity
This was part of total capital expenditure of £91.4m over the period, to add capacity, capability and drive operating efficiencies.
This included a further £7.6m as part of the ongoing £62m multi-phased expansion of the company’s Hull pork primary processing site, which is aiming to add substantial capacity and drive further efficiency improvements along with the added benefit of onsite cold storage capability.
“This ongoing investment in our primary processing asset base provides the platform to not only grow our fresh pork business but also to feed into our rapidly growing wider value-added pork businesses,” Mr Couch said.
Good progress
Mr Couch attributed the ongoing successful performance ‘to the unwavering passion, commitment, and professionalism of our teams across the business’.
He thanked Cranswick’s staff for their ‘continued dedication and support’ and its suppliers and customers. “Our successful performance owes a great deal to the substantial investment we have put into enhancing our farming infrastructure and expanding our vertical integration,” he said.
“We have increased the size, scale and quality of our pig herds through ongoing organic growth and the acquisitions of new indoor and premium outdoor pigs.
“Over the last 12 months we have strengthened our asset base, substantially expanded our farming operations, enhanced market positions and developed new customer relationships.
“We continue to make good progress against each of our strategic objectives and we are well placed to continue our successful development in the current financial year and over the longer term.”