Cranswick sees retail soar, Britvic hit by out-of-home loss

By James Ridler contact

- Last updated on GMT

Cranswick and Britvic both revealed their financial results this week
Cranswick and Britvic both revealed their financial results this week

Related tags: Drinks, Meat & Seafood

Strong COVID-19 retail demand helped boost meat processor Cranswick’s full year (FY) results, as drinks firm Britvic struggled with the loss of out-of-home sales due to lockdowns and social distancing.

Against a backdrop of ‘unparalleled challenge’, the meat firm, which was declared Company of The Year in the 2021 Food Manufacture​ Excellence Awards​, countered lost foodservice sales with significant retail and online growth.

In addition to the successes of the past year, the business declared plans to invest £100m of capital expenditure into its activities in the coming year.

That follows significant investment in 2020-2021. This had supported its Eye poultry business, the commissioning of the Cranswick Gourmet Kitchen, its cooked bacon facility in Hull, the expansion of farming activities and initiatives forming part of its ’Second Nature’ sustainability strategy.

Tim Smith succeeds Martin Davey as chairman

Cranswick also announced that Martin Davey will stand down as Cranswick’s chairman at the group’s forthcoming annual general meeting, staying on as an advisor until May 2022. He will be succeeded by former Arla Foods UK chief executive Tim Smith.

Clive Black, director and head of research at Shore Capital, said: “Cranswick’s FY2021 results demonstrate a further year of very strong progress to us, reflecting an amalgamation of new business wins, strong COVID-driven UK retail demand, a full year contribution from Katsouris, the new poultry facility and robust export demand/pricing.

“Very well invested, with a rock-solid balance sheet and significant growth potential across an expanding range of channels, Cranswick remains a high-quality investment.”

Strong operating margins

Panmure Gordon analyst Matthew Webb said Cranswick’s performance was better than expected, largely due to strong operating margins.

“The strong profit delivery came despite a material headwind from COVID-related costs of £18.6m,”​ said Webb. “This included £9.8m of costs associated with the payment of bonuses to staff, including provision of payments to be made for FY2022.”

African Swine Flu’s impact on China’s pig herds also afforded Cranswick considerable opportunities in the coming year in that market, as it was well-placed to redress shortfalls in pork supply there, Webb added.

In its annual results for the 52 weeks ended 27 March 2021, Cranswick posted a 13.9% increase in sales to £1.89bn and a 26.1% rise to adjusted group operating profit to £132.5m.

Britvic sales down

Britvic also posted interim results for the six months ending 31 March 2021.

The manufacturer – which bottles drinks for PepsiCo in the UK – reported a 6.3% drop in revenue to £617.1m for the period, with the blame laid at the feet of the re-introduction of lockdowns and continued social distancing measures damaging the out-of-home market.

Adjusted earnings before interest and tax also declined (-15.4%) along with profit after tax (-14.7%). Despite this, Britvic remained positive, citing strong growth in at-home channels that resulted in continued share gains in Great Britain and Brazil.

Commenting on the results, Julian Wild, corporate finance director at law firm Rollits, marked the year down as ‘one to forget’ for Britvic – along with many food businesses that faced difficulty during the pandemic.

“Virtually every line on the P&L ​[profit and loss] went backwards but given the problems of on-the-go/hospitality over the last 15 months, that is no surprise,” ​he said. “At-home predictably did better but may now flatten out as we hopefully come out of lockdown,”​ he said.

‘Positive, if not spectacular’

“It’s a well-managed business and Britvic has controlled cash well, so the outlook is quite positive, if not spectacular.  

“Britvic has made some investments in the healthier end of the drinks market. The jury is out on this sort of diversification but Britvic clearly testing the water (so to speak).” 

The manufacturer – which bottles drinks for PepsiCo in the UK – reported a 6.3% drop in revenue to £617.1m for the period, with the blame laid at the feet of the re-introduction of lockdowns and continued social distancing measures damaging the out-of-home market.

Adjusted earnings before interest and tax also declined (-15.4%) along with profit after tax (-14.7%). Despite this, Britvic remained positive, citing strong growth in at-home channels that resulted in continued share gains in Great Britain and Brazil.

Meanwhile, supplier Norwest Food International has reported a boost in sales and profit in its 2020 full-year report, thanks to a focus on exports and value-added products.

Related topics: Meat, poultry & seafood, Drinks, Operations

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