Rising input costs put a dent in first-half profits at Cranswick, although that didn't come as a surprise after July's profit warning.
The main problem was soaring pig prices in the first quarter, which rose around 15 per cent year-on-year, and which Cranswick couldn't recover quickly enough. Encouragingly, though, sales volumes climbed steadily throughout the half, up 3 per cent in the first three months and 7 per cent in the second, with strong UK demand bolstered by fast growing exports of ribs to the US and 'fifth' quarter meat - heads, trotters and other offal products - to the Far East, at much higher prices than those that could have been achieved at home.
Margins have also begun to improve in recent months, as a result of a pull-back in pig meat prices and price increases which were pushed through in August. Management believes that investment in its factories leaves it well positioned for what it expects to be "the group's busiest ever festive season", as households look to pork as a cheap alternative to more expensive proteins such as beef and lamb.
Broker Investec Securities expects underlying full-year pre-tax profit of £41.6m and EPS of 64.8p (2011: £46.8m/71.7p).
CRANSWICK (CWK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 715p | MARKET VALUE: | £341m | |
| TOUCH: | 710-719p | 12-MONTH HIGH: | 893p | LOW: 589p |
| DIVIDEND YIELD: | 3.9% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 472p* | NET DEBT: | 21% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 384 | 23.8 | 39.5 | 8.8 |
| 2011 | 394 | 18.5 | 29.2 | 9.0 |
| % change | +3 | -22 | -26 | +2 |
Ex-div: 23 Nov Payment: 20 Jan *Includes intangible assets of £128m, or 268p a share | ||||
