30th Jan 2014 09:26
LONDON (Alliance News) - Food producer Cranswick PLC Thursday said sales rose 14% in its fiscal third quarter, buoyed particularly by strong sales of pork products, particularly over Christmas, while its operating margin rose compared with the first half of the year as it took step to offset record high input costs.
In a trading update, the company said sales of pastry products also continued to make "pleasing progress", helped by the launch of a new range of savoury gourmet pies at the start of the quarter.
Cranswick warned that input costs remained at record highs during the quarter to end-December, but it had partly mitigated the impact through efficiency improvements, internal pig production and what it described as "constructive pricing discussions with customers".
Its net debt rose to GBP55 million by the end of December, from GBP37 million at the start of the quarter, due to the seasonal increase in working capital, but also as it invested more in its own pig breeding and rearing operations. It bought two new breeding units in December.
"The total number of pigs produced internally is now 20% to 25% of weekly requirements. This gives the Group greater control over a robust and integrated supply chain, with a clear focus on premium British ingredients and, in addition, has offset some of the impact of higher input costs," it said in a statement.
Still, debt at the end of the quarter was only GBP7 million higher than last year, and it has finance facilities of GBP100 million.
Cranswick said its pastry unit will now focus on achieving the forecast returns from its investment in a new facility in Malton, North Yorkshire.
The total sales growth of 14% included a contribution from Wayland Farms, which it acquired last April. Excluding that, underlying sales were up 13% in the three months to end-December.
In November, the company had reported an adjusted operating margin of 4.9% for the first half of the fiscal year, down from 5.5% in the year-earlier period, as it was hit by higher pig prices and start-up costs for the new Malton plant.
Cranswick shares were up 1.6% at 1,262.35 pence Thursday morning, one of the biggest gains on the FTSE250.
By Steve McGrath; [email protected]; @SteveMcGrath1
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