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Meat giant Cranswick has brushed off a drop pork retail and export sales amid a shortage of butchers to grow first half revenues and profits on increased sales poultry and other categories. 

Reported revenue for the six months to 25 September increased by 6.6% to £993.1m, with like-for-like revenue, excluding the modest contribution from Ramona’s Kitchen and Atlantica UK during the period, increasing by 6.4%. 

Volume sales were up 4.1% as “exceptionally strong” poultry revenue growth was complemented by good progress in its convenience and gourmet product categories. 

Growth was partly offset by lower fresh pork revenue, with lower retail and export revenue partly compensated by more volume being directed into the domestic wholesale market.  

Like-for-like revenue was 25.5% higher compared to the same period two years ago with all four categories making a positive contribution. 

Like-for-like Fresh Pork revenue was 5.3% below the prior period, primarily reflecting lower export revenues and capacity constraints resulting from the shortage of skilled butchers.  

Far East export revenues were 11.2% down on the same period last year, reflecting reduced demand from China and the ongoing inability to export to China from its Norfolk facility due to the voluntary suspension of the site’s China export licence in October 2020 following a COVID-19 outbreak at the site.   

Convenience, which comprises cooked meats and continental products, was up ncreased by 4.9% on an organic basis, with reported revenue growth of 5.4% reflecting increasing consumer demand for “convenient and inspirational food”. 

Poultry revenue increased by 35.5% during the period following the uplift in processing capacity at its Eye facility to 1.4m birds per week. 

Adjusted group operating profit increased by 12.3% to £69.6m with adjusted Group operating margin improving by 35bps to 7.0%.   

The profit uplift reflected the combined benefits of the additional contribution from the revenue uplift and lower COVID-19 related costs offset by a lower contribution from Far East exports.  

Also, profit was dampened by inflationary pressure across a number of cost categories, particularly wage inflation, although Cranswick said “good progress continues to be made in managing and recovering these incremental costs”.   

CEO Adam Couch commented: “We have made further positive and sustainable progress during the first half of the year, delivering revenue and earnings growth in an incredibly challenging operating environment. 

 “We continue to invest in the long-term sustainability of our business. We have made excellent headway in delivering our Second Nature sustainability strategy with several major milestones reached during the period. These include achieving carbon neutral status across all 14 of our eligible manufacturing facilities and committing to purchasing 100% deforestation-free soya which we expect will result in a c.20% reduction in carbon compared to the previous system. 

“Our outlook for the current year is unchanged and we have a solid platform from which to continue Cranswick’s successful long-term development.” 

Cranswick shares are up 2.1% to 3,700.5p so far this morning on the results.

Morning update 

FTSE 100 catering giant Compass Group has posted a hike in profits as it continues to recover from the Covid pandemic, though full year sales fell amid continued lockdowns during the year. 

Compass Group declined by 6.3% on an organic basis in the 12 months to 30 September as the pandemic continued to impact revenues amid lockdowns and restrictions. 

Revenues increased through the year, with first quarter sales down 33.7% and by 26.8% in the second quarter, while third and fourth quarter sales were up 36.4% and 32.9% respectively. 

Overall, it saw annual growth in its healthcare and senior living category (6.9%) and defence, offshore and remote (8.3%), while business and industry (-21%), education (-3.7%) and sports and leisure (-6.7%) remained down. 

In particular, it said revenues in business & ndustry sector have remained subdued due to the delayed return to offices in major markets. 

Overall revenues recovered to 76% of 2019 revenue, with the fourth quarter exit rate at around 90%. 

Compass said it had “excellent” new business at 7.2% and retention at 95.4%.  

Underlying operating profit was £608m, which represents 6.1% year on year growth on a constant currency basis due to continued focus on efficiency and cost control. 

Statutory operating profit was up £72m to £560 million, due to the improved margin and the £48m of non-underlying costs recognised in the prior year. 

CEO Dominic Blakemore said: “Our strong financial recovery in 2021, including record new business wins and client retention, is a credit to our teams’ exceptional resilience, dedication and expertise in extraordinary circumstances.   

“Looking ahead we are now focused on growth, driven by encouraging market trends and our ability to provide more bespoke, digital and sustainable solutions that meet the evolving needs of clients in a post-pandemic world. The tailwinds from first time outsourcing continue and, combined with our differentiated operating model and investment opportunities, we are in a strong position for growth. 

“In the short term, we expect FY22 organic revenue growth to be 20%-25%. Full year underlying margin is anticipated to be over 6%. With ongoing mobilisation costs and inflationary pressure, further improvement will be weighted towards the second half of the year as we return to underlying margin of around 7% by year end.  

“As we emerge from the pandemic, our strategic focus is on sustained growth for the future, to enhance our competitive advantages and further strengthen our position as an industry leader in food services. We are increasingly excited about the significant structural growth opportunities globally, leading to the potential for revenue and profit growth above historical rates, returning margin to pre-pandemic levels, and rewarding shareholders with further returns.” 

Elsewhere, pet retailer Pets at Home saw annual sales jump 18% to £677.6m, with a continuing increase in active customers amid the pandemic boom in pet ownership. 

Retail revenue grew 22% to £619.6m, including omnichannel revenue growth of 21.5% to £93.7m, representing 15.1% of total retail revenue. Like for like revenue growth in retail was 21.9% for the period and 28.9% on a 2-year basis. 

Food revenue grew by 21.4% to £336.7m reflecting our its continued recruitment of new customers throughout the period. Accessories revenue grew 20.9% to £257.7m, with strong growth in categories such as dog toys, consumables and training accessories. 

Underlying group gross margin increased year-on-year by 101 bps to 48.7% with gross margin within Retail was down 34bps to 48.1% due to the increase in freight costs. 

Nonetheless, underlying group pre-tax profit improved from £39.6m to £70.2m, with retail pre-tax profit up from £32.3m to £53.1m on strong trading and the annualisation of the revenue and cost implications of Covid-19 in the prior year. 

Pets at Home said it continues to assess and mitigate where possible the widely reported challenges in the near-term operating environment relating to supply, logistics and labour availability. “While we are not immune to such challenges, we are well placed to manage them,” it said. 

Despite the challenges, the group anticipates that full year underlying pre-tax profit will be at the top end of the current range of analyst expectations. 

It said that the stronger than expected and continuing growth in the pet population over the past eighteen months, combined with continued customer themes of pet humanisation, premiumisation and renewal, is increasing the size of its market and scale of the opportunity.  

“In conjunction with the clear advantages of our omnichannel model in consistently taking market share by providing everything a pet owner needs through the full lifetime of their pet, we now see a pathway to £2.3bn of customer revenue across our business over the medium term,” it said. 

On the markets this morning, the FTSE 100 is down 0.5% to 7,219pts.

Risers include Hotel Chocolat, up 8.5% to 510p, McColl’s, up 4.6% to 12p, Nichols, up 3.3% to 1,384.6p and Pets at Home, up 1.7% to 466p.

Fallers include McBride, down 4% to 66.6p, SSP Group, down 2.9% to 243.9p and Naked Wines, down 2.8% to 615p.

Yesterday in the City 

The FTSE 100 kicked off the week on the front foot, rising 0.4% to 7,255.5pts yesterday. 

Marks & Spencer was up 2% to 245.5p after weekend speculation that private equity player Apollo was mulling an approach for the business. 

Risers included McBride, up 5.2% to 69.4p, Bakkavor, up 3.7% to 124.4p, Finsbury Food Group, up 2.5% to 102p, Imperial Brands,. Up 1.7% to 1,610.5p, Greencore, up 1.5% to 133.5p and Devro, up 1.4% to 218p. 

The day’s fallers included McColl’s Retail Group, down 10.4% to 11.5p, Hotel Chocolat, down 7.1% to 470p, Just Eat Takeaway.com, down 5.1% to 5,092p, THG, down 4.8% to 184.5p, Naked Wines, down 4.2% to 633p, Deliveroo, down 2.8% to 300p and Pets at Home, down 1.8% to 458.2p. 

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