Cranswick (LON:CWK) has posted yet another year of strong growth. The business is witnessing growth in all its categories and strong innovation is keeping its offering relevant and desirable. Management has guided toward significant capex investment in 2017 to continue increasing capacity to match its growth prospects.
Premium and convenience-oriented positioning in the sweet spot
The current consumer health trend of increased protein consumption has boosted the market, particularly in poultry. Cranswick’s product offering is skewed towards the premium end of the market, and this is witnessing disproportionate growth. The company has seized on the opportunity and launched new ranges in convenient formats that tap into these trends, for example premium sausages are growing at the expense of standard lines, and pre-cooked and pre-seasoned poultry is seeing very strong growth. Innovation remains a key part of Cranswick’s growth engine and the company has won several new contracts across various channels.
Space remains competitive
The UK retail environment remains tough, with the discounters and the big four supermarkets fighting for market share. While this is not an easy environment in which to operate, management is well-versed in dealing with a tough set of customers. Equally, the competitive landscape remains challenging, with strong competition from both domestic and international players. Indeed, group operating margin was down 30bp during FY17 to 6.1%. Cranswick is committed to innovation and also strong customer relationships, hence it has earmarked £70m of capex investment for FY18 to upgrade and expand several sites such that it can continue to operate smoothly in periods of peak demand.
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