Release Date: November 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cranswick PLC (CRWKF, Financial) reported strong financial performance with a 6.1% increase in revenue and a 17.4% rise in adjusted profit before tax.
- The company achieved a significant 16.4% growth in poultry revenues, which now account for nearly 20% of group sales.
- Operating margin improved to 7.5%, reflecting successful integration and expansion of pig farming supply chains.
- Cranswick PLC (CRWKF) has maintained a strong balance sheet with low leverage and a return on capital employed of 18.7%.
- The company is increasing its interim dividend by over 10%, continuing its 35-year streak of unbroken dividend growth.
Negative Points
- Cranswick PLC (CRWKF) faces challenges with bureaucratic and complex planning processes, hindering larger expansion plans in the poultry sector.
- The company is dealing with inflationary pressures from increased national insurance contributions and the national living wage.
- The out-of-home market segment is struggling due to inflation in key raw materials and labor costs, impacting consumer spending.
- Export markets remain challenging, although volumes have increased due to higher processing rates.
- The company anticipates significant headwinds in manufacturing and retail sectors due to changes in national insurance and living wage rates.
Q & A Highlights
Q: Can you provide more details on the expansion plans for the poultry sector?
A: (Unidentified_1) We are committing to a £20 million investment in our fresh poultry operations, with £7 million allocated to increasing incubatory capacity at our Kenning Hall site. This will reduce reliance on third parties and increase bird production. Additionally, £13 million will be spent at our I site to add 15% to processing capacity, improving yield, labor efficiencies, and capacity optimization.
Q: How is Cranswick managing the impact of increased national insurance contributions and the national living wage?
A: (Unidentified_3) We anticipate significant headwinds due to these changes. However, we plan to manage these costs through our annual review of open book ways of working, somewhat offset by falling base commodity prices. We will also pass some cost increases onto customers.
Q: What is the outlook for Cranswick's retail and food service channels?
A: (Unidentified_3) Retail has been our strongest growth area with a 9% increase year-on-year. Despite market headwinds, we've managed to grow our food service business. We expect demand for our products to remain resilient, supported by strategic alignment with key retailers like Tesco, Sainsbury's, M&S, and Lidl.
Q: Could you elaborate on the performance and growth strategy for the pet food segment?
A: (Unidentified_3) Our pet food segment has grown significantly, with volumes up nearly 48% and value sales up by 70%, driven by our partnership with Pets at Home. We have launched a new product range that will help maintain volume momentum and crystallize growth into the new year.
Q: What are the strategic priorities for Cranswick moving forward?
A: (Unidentified_1) Our strategic priorities include continuing to invest in our asset base, focusing on long-term growth, and delivering industry-leading service, quality, and innovation. We are also committed to expanding our pig farming and feed milling operations, which have increased pig production by 18% year-on-year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
