Shares in Cranswick (CWK) rose sharply after the food producer delivered a better than expected 4 per cent increase in first-half underlying pre-tax profit to £23.2m. However, substantially higher input costs, as well as expenses associated with the new gourmet pastry facility, trimmed operating margin by 60 basis points to 4.9 per cent.
Once again, the company was faced with the impact of higher pig prices, but these were partly offset by efficiency improvements and a significant increase in sales, with fresh pork sales up 26 per cent. Furthermore, to meet an increase in demand, the group has expanded its pig breeding and rearing activities within the UK through the acquisition of three breeding units. Cranswick now has a herd of 15,000 breeding sows able to produce 7,000 pigs a week, which means that as much as a fifth of the pigs used are bred internally. Other products also delivered solid growth, with bacon sales up 18 per cent, and cooked meats by 13 per cent. And with an improvement in the weather, more barbecues lifted sausage sales by 4 per cent.
Analysts at Shore Capital are forecasting full-year pre-tax profit of £49.4m and EPS of 79.3p (from £49.3m and 78.7p in 2013).
| CRANSWICK (CWK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,150p | MARKET VALUE: | £561m | |
| TOUCH: | 1,148-1,150p | 12-MONTH HIGH: | 1,200p | LOW: 733p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 588p* | NET DEBT: | 13% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 419 | 22.4 | 35.7 | 9.40 |
| 2013 | 484 | 26.1 | 43.5 | 10.0 |
| % change | +15 | +16 | +22 | +6 |
Ex-div: 4 Dec Payment: 24 Jan *Includes intangible assets of £131m, or 267p a share | ||||
