Profit warning wipes £300m off value of food group

Food producer Cranswick had £300m wiped off its market value after its shares plummeted this morning in the wake of a profit warning.

The FTSE 250 business had told investors that “the group’s operating margin is likely to decline” in the year to March 2020.

It blamed “the potentially challenging commercial landscape, together with start-up and commissioning costs associated with the new Eye Facility, only partly offset by management actions”.

Its shares dropped more than 20% in early trading, to its lowest point in nearly two years.

Pork producer Cranswick is one of the region’s largest public companies and employs more than 5,000 people.

In a trading update to the stock market the group had said sales were down 2% in the final three months of 2018 while the UK pig price had continued to drop during the period, and ended the quarter 7% lower than a year earlier.

Despite that, it said its expectations for the current year “are unchanged” and it believes the business will overcome its challenges next year.

In a statement to the stock market, it said: “Notwithstanding these short-term challenges, our new Eye and existing added value, poultry facilities and our broadening customer base, provide a solid platform to further develop our poultry business and drive future growth in this attractive and expanding protein category.

“The board is confident that continued focus on the strengths of the company, which include its long-standing customer relationships, breadth and quality of products, robust financial position and industry leading asset infrastructure, will support the further successful development of the group over the longer term.”

Throughout the period, Cranswick continued to invest at record levels across its asset base to increase capacity, add new capability and drive further operating efficiencies.

Construction of Cranswick’s new poultry processing facility in Eye, Suffolk, is continuing to plan with the exterior building works nearing completion and commissioning anticipated towards the end of the next financial year.

The firm has also agreed a long-term supply agreement with supermarket chain Morrisons to supply fresh poultry from the new Eye facility. In addition, the firm will shortly start supplying the same customer with a range of cooked poultry products from its added value poultry facility in Hull.