Consumer squeeze hits pork producer
A supplier of sausages and bacon to supermarkets today warned that attempts to pull in hard-pressed consumers by slashing its prices would squeeze the business this year.
Cranswick, which supplies the Jamie Oliver brand as well as Sainsbury’s and Tesco, reported a 10 per cent jump in sales in the three months to 31 March across all its products.
But the Hull-based group, which was formed by farmers in the 1970s, said while lower pricing in the period had boosted volumes it would squeeze margins this year.
Elsewhere, Cranswick said it had sold its 49 per cent stake in cooked meats business Farmers Boy to the joint-venture’s partner supermarket Morrisons.
Cranswick said it had delivered a range of “competitively priced” products for “hard pressed, financially constrained consumers”.
But it added: “While driving volumes, this has had some impact on operating margin which, notwithstanding some recovery as the year progressed, will, as expected, be below that achieved in the previous financial year.”
The group hailed a £20 million investment drive during the year to deliver new product ranges.
Cranswick last year warned soaring pig-feed prices were hitting the business and issued a profits warning for the full year.
The company reported sales of £758m and pre-tax profits of £47.1m in the year to 31 March.
Shares in Cranswick were nearly 1 per cent higher after today’s update.
Clive Black, analyst at Shore Capital, said Cranswick had delivered a “very healthy” fourth-quarter performance.
He said: “Cranswick continues to benefit from the strong value credentials of pork, relative to other protein sources such as beef and lamb, which underpins growth in our view.”
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Wednesday 19 June 2013
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