1 February 2008
Total sales for the Company in the quarter to 31 December 2007 were £158m, an increase of 18 per cent compared to the same period last year after adjusting for the impact of the sale of the animal feeds business in May 2007.
In the food division, turnover increased by 17 per cent compared with the same period last year, which was pleasing given strong comparatives. Most product categories showed double digit growth, with sausage and bacon performing particularly well and benefiting from investment in additional capacity during the year. Production of premium bacon from the new factory at Sherburn-in-Elmet commenced on schedule, enabling the high December demand to be met and bacon activities are currently being consolidated on to this site.
Turnover in the pet division, which accounted for 6 per cent of total Company sales in the quarter, was up by 37 per cent following better bird food sales. The aquatics business is now fully operative at Chorleywood following a fire in December 2006. There has been significant raw material price inflation in the pet food business, most of which has now been passed on in the finished product price.
During the second half, the food division has suffered from some sales price deflation. Furthermore, the industry is experiencing rising input costs in pig meat, beef and poultry. Whilst Cranswick is benefiting from higher than planned volume gains, it is currently proving difficult to pass on the full impact of rising costs. Discussions on this are ongoing with customers. Assuming a continuation of current conditions, the impact of these two factors, together with the impact of the fall in the value of sterling on the charcuterie business, is expected to have a modest negative impact on the results to 31 March 2008. The Directors expect the effect of these issues in the current year to be approximately matched by exceptional gains of around £1.8m.
Whilst it is disappointing to be experiencing these pressures, which can be expected to moderate the Company’s growth rate, Cranswick is in a very strong position to capitalise once equilibrium returns to input prices and selling prices. Our market positions are strong, our plants are well invested, the business is highly cash generative and we have excellent customer relationships.
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