Cranswick cautious as costs rise
BACON to bird seed business Cranswick saw sales leap by 18% to £158m in the three months to the end of December but it has warned that it is seeing price deflation for its products as well as struggling to pass on the rising costs of raw materials to customers.
The East Yorkshire food firm said today that the combination of these two factors would have a “modest negative impact” on its results to the end of March.
However the directors said that the effects of rising costs and falling prices plus the impact of the fall in the value of sterling on its charcuterie business, would be “approximately matched by exceptional gains of around £1.8m” this year.
“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,” the group said in a third quarter trading statement today.
“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,” it added.
The Driffield-based group's sales in the three months to December 31 were up 18% compared to the same period in 2006 after adjusting for the impact of the sale of its animal feeds business in May 2007.
In the food division, turnover increased by 17% helped by good sales of its premium bacon and sausages during the Christmas period.
Cranswick said that most of its products saw “double digit growth” during the period reflecting increased investment in capacity.
“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,” it said.
Meanwhile turnover in the pet division, which makes up for 6% of total sales, was up by 37% following better bird food sales while its fish food production is fully up and running following a fire at the Chorleywood factory.
Cranswick said that it had been able to pass on “significant” raw material price inflation in pet foods to the selling prices.
Cranswick was formed by farmers in the early 1970s to produce pig feed. It expanded into pork products a decade ago and now specialises in premium sausages, pork, ham and bacon.
The Cranswick Mill pig feed business, the group's original activity, was sold to BOCM Pauls, one of the two leading suppliers of animal feed, last May.
The group now employs more than 4,000 people in operations throughout the country.
