Cranswick H2 2025 Earnings Report

Cranswick EPS Results

• Actual EPS: GBX 273.40
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Cranswick Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Cranswick Announcement Details

• Quarter: H2 2025
• Date: 5/20/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 20, 2025
• Conference Call Time: 4:30AM ET

Cranswick (LON:CWK) is a leading and innovative British supplier of premium, fresh and added value food products, with revenues in excess of £2.0 billion. We produce and supply premium food to UK grocery retailers, the food service sector and other global food producers. Our core market is the United Kingdom where we provide a range of high quality, predominantly fresh food including Fresh Pork, Poultry, Convenience and Gourmet Products and more recently have further expanded our portfolio by adding high quality pet food. Cranswick is one of the first companies to offer a true farm to fork proposition, employing over 13,700 people across 20 well-invested and highly efficient facilities in the UK. Our ambitious sustainability strategy ‘Second Nature’ has been developed to deliver the Group’s vision to become the world’s most sustainable meat business. Cranswick has committed to be a Net Zero business across its operations by 2040.

Cranswick H2 2025 Earnings Call Transcript

Presentation

[Adam Couch, CEO at Cranswick]

You've got the usual crew here today, myself, Chris, Jim, Mark as well as Tim and a number of other of our senior leadership team here as well. I know it's only a few weeks since we saw you since the Capital Markets Day, but before we start the results presentation, want to address the recent Mail on Sunday article and the distressing and wholly unacceptable farm behavior reported. It's important to stress this isn't and doesn't reflect Cranswick's incredibly high animal welfare values and standards. Those of you in this room that know me, you know our team, you know this business, appreciate how devastating this has been for us all and how strongly and rapidly we will respond to that. We're considered industry leaders in this sector and animal welfare footage that we've seen here falls far short of the standards that we expect.

[Adam Couch, CEO at Cranswick]

The Northmoor farm itself was acquired back in August 2023 as part of the wider Elsham Links business. It's one of 18 farms in total that was purchased, and we immediately invested in the infrastructure, the people and particularly the culture of the business, knowing that the Cranswick sites are judged to operate to a high standard. And this work continues today. We immediately suspended all the members all six members of staff on that farm. We also self suspended the farm from the Red Tractor assurance.

[Adam Couch, CEO at Cranswick]

And we'd advised all our customers of the situation and suspended all movements and instigated a full investigation. Cranzwick's protocols and animal welfare training were well known and well understood by the farm staff. And they understood those and yet despite this, the standards expected were not followed and disciplinary proceedings have commenced. We've reiterated and accelerated training across the business And in the fourteen months since this footage was taken, we had already started installing smart learning monitoring systems, which include behavioral analysis across our indoor systems. We've also reminded all our colleagues of our whistleblowing procedures, which were already prominently displayed across the business.

[Adam Couch, CEO at Cranswick]

But most importantly here and to provide further assurance to both customers, shareholders and stakeholders, we commissioned an independent veterinary led welfare review of our standards and protocols, and we'll update the stakeholders once this has been completed. We're now operating in over 400 farms, with 45 of these being indoors. And over the last three years, we've grown this through acquisition and investment accordingly. We continue to improve and invest in these sites and the people that run our farms. And we have some of the most experienced and dedicated teams in the sector.

[Adam Couch, CEO at Cranswick]

But I can assure you that Cranza will raise the bar in terms of animal welfare and ensure that our standards are fully, consistently applied across the business going forward. Now if we can turn to the points in hand on Page four. As you know, we always like to include this slide as we're incredibly proud of our long term track record. Despite all the challenges that we faced, we've continued to drive the business forward at pace, and I'm delighted to be confirming today our thirty fifth year of unbroken dividend growth. And I want, on the following page, to briefly reflect on some of the many commercial and strategic highlights throughout the course of the year.

[Adam Couch, CEO at Cranswick]

Revenue increased by almost 7%, underpinned by volume growth of almost 8%, driven by strong growth in premium, added value, further strong growth in poultry and what was a record trading period over the Christmas period. Adjusted operating margin increased to 7.6%, reflecting a strong contribution from the growing agricultural operations, excellent capacity utilization, investment in automation and tight cost control. You'll recall Jim covered in the Capital Markets Day that we've expanded long term supply arrangements with many customers at the retail level. Investment across our agricultural operations has continued at pace, with our own pig production increasing by 14%, taking self sufficiency now to over 55%. Across our poultry farms, we've secured the necessary space to enable the move to lower stocking densities.

[Adam Couch, CEO at Cranswick]

However, this requirement, which is for a further 20% space required for the same number of birds, does place additional pressure on what is an extremely strong growth industry. This has been start of investment over recent years, but we're prepared to continue investing in this sector at pace to grow our own business and support the wider industry at a time of rising demand. We spent a record £138,000,000 in capital expenditure across the estate, making significant progress on delivering earning, enhancing projects that will add capacity, expand capability and drive further efficiencies. In addition to the record capital expenditure, we completed several complementary acquisitions, including the GBP 24,000,000 purchase of JSR Genetics. Through the integration of a leading pig genetic producer, we can improve the eating quality and the volume that we produce from our own supply.

[Adam Couch, CEO at Cranswick]

And this will further support the premiumization and deepen those customer relationships. And finally, I'm pleased to announce the Blakenings acquisition on last Friday. We've known the business well over the last fifteen, twenty years or so. Phil and Sue are well known to myself who are the Blatemans family, and we've had a close working relationship with these guys. Blatemans is a well invested manufacturer of raw and cooked sausage.

[Adam Couch, CEO at Cranswick]

The business specializes in producing to the foodservice sector and therefore, is highly complementary to our existing added value gourmet business. We look forward to welcoming the entire Blakeman crew on board to Brunswick and working to develop further. And just on to Slide six, just to give a quick brief on these before Mark jumps into them, but this just demonstrates some of the key financial metrics. We continue to deliver on the ambitious growth plans with discipline. I've already highlighted the strong volume led growth and improved operating margins.

[Adam Couch, CEO at Cranswick]

Adjusted earnings per share was 15.6% ahead of the corresponding period last year. Our cash generation has been strong. Our leverage remains low, and we've maintained return on capital employed at over 18.5% as we continue to effectively deploy capital at pace. And finally, we're increasing the dividend by just over 12% to 101p per share. And on that point, I'll now hand over to Mark, who will go into more detail on the financials.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Thanks, Adam. Good morning, everyone. As Adam said, I'm going to spend the next few minutes running through the FY 2025 highlights. And throughout the presentation, as always, unless I state otherwise, I will be referring to adjusted numbers which exclude the impact of IAS 41 biological assets, amortization of acquired intangibles and impairment of intangible assets. It's also worth pointing out that last year was a fifty three week accounting period, so year on year movements and references to 2024 comparatives will be represented on a fifty two week equivalent basis again unless I state otherwise.

[Mark Bottomley, CFO & Executive Director at Cranswick]

And as always you'll find full reconciliations between adjusted measures and the statutory measures in the appendices at the back of the pack. So another look at the financial highlights on page eight of the deck. We have made incredibly strong progress over the last year delivering another set of record results. Over the period revenue is up 6.8%, adjusted PBT is 14.3 percent higher and EPS and DPS are 15.612.2% ahead respectively. Our cash conversion continues to be extremely strong with free cash flow of just under GBP $214,000,000.

[Mark Bottomley, CFO & Executive Director at Cranswick]

And net debt, excluding leases, increased by just GBP 39,600,000.0 over the period despite a record GBP 138,000,000 spent on CapEx and GBP 25,000,000 spent on M and A. Now just looking at those financials in a little bit more detail on Slide nine. You can see that the slide shows financial measures on a reported basis against 2024, but also on a comparable fifty two versus fifty two week basis as well. And I will just focus on those fifty two week comparatives as we go ahead. Revenue at GBP2723.3 million increased by 6.8%, with like for like revenues ahead by 6.4%, reflecting strong volume growth of 7.7%.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Adjusted operating profit increased by 14% to £206,900,000 with operating strengthening to 7.6%, some 48 basis points higher than FY24. Adjusted profit before tax at £197,900,000 was 14.3% ahead and adjusted EPS at 273.4p increased by 15.6% slightly ahead of the increase in PBT reflecting both a slightly lower adjusted tax rate and a modest reduction in the number of shares in issue compared to FY24. We are proposing to increase the final dividend by 8.7p or 12.9% to 76p per share from 67.3p per share last year and combined with the interim dividend of 25p per share this gives a total dividend of 101p per share compared to 90p per share last year, an increase of 12.2%. As Adamo has already mentioned, this extends the period of consecutive years of dividend growth to 35. And return on capital employed at 18.5% increased by seven basis points compared to last year And our strong return on capital demonstrates our ability to deploy capital at pace to generate strong returns and to deliver sustained compound growth.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Now looking at revenue in a little bit more detail on Slide 10. On a comparable fifty two week basis, as I've already mentioned, revenue was up 6.8% with volume growth up 7.7%. Our category performance was strong across the board with the exception of convenience where growth was lower due to stepping away from some lower margin cooked meats business at the start of last year. You may remember that we flagged this at last year's presentation. It's also worth noting from a revenue perspective the milestone achieved by our fresh pork business.

[Mark Bottomley, CFO & Executive Director at Cranswick]

When you take into account the sales made internally to our added value businesses, total fresh pork sales from our three primary processing facilities surpassed £1,000,000,000 for the first time. Our fresh pork export revenue was 10.2% ahead with a strong second half following the reinstatement of the Norfolk China export license. Poultry revenue was 20.3% ahead, with the onboarding of new premium retail added value business driving an improved sales mix and increased volumes. And our Pet revenue grew by just under 48%, reflecting the ongoing successful rollout of the Pets at Home business. Now looking at margin in more detail on Slide 11.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Through consistent targeted investment, we have continued to deliver margin progression across all key metrics with margins now improving for six consecutive half year periods. Gross margin increased by 100 basis points to 15.4%, EBITDA margin increased by 50 basis points to 10.8% and operating margin was similarly 48 basis points higher at 7.6%. That 50 basis point gap between the gross margin and EBITDA movements is explained by the benefit of £5,700,000 of insurance receipts received last year which were accounted for as other operating income. So stripping this number out brings the improvement in EBITDA and operating margin more into line with that uplift in gross margin. And margin improvement reflects, as Adam mentioned at the outset, that strong contribution from our growing agricultural operations, excellent capacity utilisation, continued investment in automation and a relentless focus on cost control.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Now moving on to the balance sheet and cash flow on Slide 12, you can see our net debt bridge there, with net debt increasing by 73,000,000 to GBP 172,400,000.0, including £132,700,000 of lease liabilities. Strong EBITDA related inflows of £293,200,000 were offset by an investment in working capital, including biological assets of £44,300,000 Some of this is that step up in biological assets of nearly £9,000,000 There was also a slight adjustment on receivables where we adopted early an amendment to IFRS nine relating to cash in transit via electronic transfer which comes into force next year but we brought that in a year early. Tax paid in the period was £41,500,000 which is just £100,000 higher than last year and as I mentioned again record investment in CapEx and acquisitions of £160,600,000 was significant and I'll provide more detail in a moment or two. Dividends paid in the year totaled £49,500,000 that was £5,600,000 up from last year reflecting the increase in the FY24 final and FY25 interim dividends. And we also made EBT, our purchase of shares for our EBT, our employee benefit trust of £25,300,000 in the period and lease payments totalled £22,200,000 The value of lease liabilities within net debt increased by 33,400,000.0 primarily reflecting the increase in chicken rearing space needed following the industry wide move to lower stocking densities.

[Mark Bottomley, CFO & Executive Director at Cranswick]

As you can see, despite all this we've maintained an investment grade balance sheet and with very modest levels of bank debt and gearing our leverage still remains comfortably below one times. Now turning to page 13 and looking at our cash flow performance over the longer term. And you can see over the last eight years, and indeed going back much further, our cash performance has been consistently strong. We've generated over GBP 1,200,000,000.0 of free cash flow over this period. And of this, we have reinvested over £700,000,000 in CapEx and £198,000,000 in M and A.

[Mark Bottomley, CFO & Executive Director at Cranswick]

And in so doing, we continue to strengthen our business and grow our competitive advantage. We've also returned over £250,000,000 to shareholders through our progressive cash dividend policy. And as a reminder you can see on the right hand side we have a £250,000,000 revolving credit facility which extends through to November 26 and we've got access to a further £50,000,000 on the same terms with the facility providing generous headroom to continue our growth strategy. Now looking at investment, and that record investment in more detail. We invested 138,000,000 across our asset base this year with significant progress made on the pipeline of earnings enhancing major capital projects.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Some of the key ongoing and completed projects are covered on the slide. And the four big ones that we have called out consistently, we spent £63,000,000 across those. We continue our £62,000,000 multi phased expansion project at our whole primary pork processing facility which is progressing as planned. And I should add that we've now also committed a further 35,000,000 at that site to lift capacity in due course from 35,000 to 50,000 pigs per week and that project is due to be completed by the March 2027. The 25,000,000 of fit out of our Hummus and Dips facility in Worsling Manchester is ongoing with the initial phase one, part of that now successfully commissioned.

[Mark Bottomley, CFO & Executive Director at Cranswick]

The £29,000,000 expansion of the two added value poultry sites in Hull is now substantially complete with the new business on boarded and the £22,000,000 project to increase incubatory and processing capacity at the Kenning Hall and EyeSight respectively is underway. And again as I mentioned despite this record investment ROCE has been maintained at 18.5% and deploying capital at pace over the long term and delivering consistently strong returns on that invested capital is one of the hallmarks of Cranzwick's long term success. I won't go into too much detail on this slide but it's one you should all be familiar with by now. It sets out our value creation model alongside our recently updated medium term targets. And we continue to deliver successfully against this model.

[Mark Bottomley, CFO & Executive Director at Cranswick]

And I'm pleased to report good progress against all the targets that we updated at our recent Capital Markets Day back in March. We have a sustained capital allocation framework which you can see on slide 16. We will continue to invest in the business to support our growth strategy with medium term CapEx guidance of circa 50% of EBITDA to add capacity, build capability, add automation. Having invested £138,000,000 in FY 2025, we still have a very strong forward pipeline. We'll maintain an investment grade balance sheet with targeted leverage of less than two times EBITDA.

[Mark Bottomley, CFO & Executive Director at Cranswick]

We'll maintain a progressive dividend policy with cover of at least two and a half times EPS to DPS. This was maintained in FY 2025 with that 12.2% growth in dividend per share and cover of over 2.7 times adjusted earnings. And we will continue to explore complementary targeted bolt on M and A with returns ahead of our group WACC. We successfully delivered the 24,000,000 acquisition of JSR Genetics during the period and as announced today completed the 32,000,000 acquisition of Blakemans last Friday. Turning to Page 17, we presented this slide for the first time at the Capital Markets Day back in March, setting out how our attractive business model and strategy is well aligned to delivering strong compound growth and our FY '20 '20 '5 results demonstrate just that.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Over the last five years we have delivered double digit compound revenue growth and improved operating margin by 62 basis points. We've consistently generated strong cash flows, which allow us to invest at pace across our asset base and in targeted M and A, with two acquisitions completed in the last five months. And we've delivered a return on capital employed in the high teens well ahead of our weighted average cost of capital. Our business model has proved to be incredibly resilient despite the challenges faced and has enabled us to increase our dividend for the thirty fifth consecutive year. And our business model and strategy are built on solid foundations with an unparalleled quality asset base, depth of management and balance sheet robustness.

[Mark Bottomley, CFO & Executive Director at Cranswick]

These attributes set us apart from our competitors and form a platform which will support the continued ambition and growth of the business over the next financial year and the long term. Now turning finally to Slide 18 and looking at our forward guidance for FY 2026. Including the ten month contribution from Blakemans, we expect revenue growth in FY twenty twenty six of circa 7%, adjusted operating margin of circa 7.5%, in line with our medium term target, finance costs of approximately £12,000,000 and an effective tax rate of 26.3%. And as highlighted at our recent Capital Markets Day, we now expect our investment in CapEx to accelerate going forward to around 50% of EBITDA. So before I hand over to Jim, just to summarize, we have grown revenue by 6.8% with volumes ahead 7.7%, adjusted profit before tax increasing by 14.3% and adjusted earnings per share up 15.6%.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Our cash generation is strong, we've invested at record levels and we are increasing our full year dividend by 12.2%, our thirty fifth consecutive year of dividend growth. Our robust and sustainable business model deploys capital at pace to drive strong and compound returns. And on that note I will hand over to Jim.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Good morning ladies and gentlemen, so in the usual format I will cover off the key commercial developments of the year starting with a bit of market context and then on to our performance in the twenty four to twenty five period and then finishing with the outlook for this current financial year. Over the page on to page 20, so the fresh and chilled market growth continues and the biggest percentage growth driver would be within M and S up 11.2% and as you can see from the scale here they are actually making significant progress to be almost as big as Morrisons when you context that with Morrisons used to being a retailer that we contextualised as one of the big four I think it's a real standout to the performance M and S have delivered over recent years. Tesco obviously increasing sales in the largest absolute terms at plus 6.8 with Sainsbury's up 7.3 so these are trends we've been seeing in recent periods and very much more of the same with Sainsbury's and Tesco leading the large range retailers and M and S putting a stellar performance in from a premium point of view. Looking at the discounters, Lidl are very much leading the charge there and actually delivering the second largest growth in market share after M and S there, up 9.7%.

[Jim Brisby, Chief Commercial Officer at Cranswick]

On the chart below volumes across the main proteins are growing despite some fairly significant inflationary pressure on all these sectors and I think you know when you look at actually the underlying performance of beef which was already the most expensive protein even with that fairly significant inflation in the sector consumers are still continuing to demand protein, very much in the form of meat and meat is very much back on trend from a health perspective and customers really recognising the particular protein element of the benefits of eating meat and as you can also see there is even from a small base no growth whatsoever other than price in the meat free space. So moving over the page on to '21 I'm just looking at our own commercial progress within the year. We've seen resilient demand across actually all our categories despite that backdrop I mentioned of inflationary pressures and the pressures on the consumer spending ability as well. Volumes holding up extremely well, meat consumption continuing to grow as that key source of protein as part of a healthy diet. The growth has been spread very equally in all categories but even faster actually in the premium tiers, obviously M and S's performance is one way of pulling that out but you will see as well very much in our premium space we are really seeing the drive premium going forward very much as consumers are consuming more calories in the home rather than out of home.

[Jim Brisby, Chief Commercial Officer at Cranswick]

The inflation I mentioned has been well managed in the main through our open book strategic models including the annual resets to reflect labour, national insurance costs, utilities and overheads, so very much helping to deliver that stable and improving margin position across the group. We are working very much with our large strategic customers to build longer term plans to deliver supply chain resilience and alignment, really helping deliver their strategic objectives around value, quality and sustainability. Service levels over the periods have been excellent again building on our reputation and particularly over that festive period which is so important as mattering for the demand profile but also so important to fitting up consumers and customers alike in their own market share delivery. We are continuing to grow organically our own market share within existing categories through securing increased share of the categories we are working with retailers on as well as securing new contracts and new retail business across the various product areas around the group. We are also well aligned to those retailers that are winning that I mentioned on the first slide and we have an incredibly strong innovation pipeline focusing on health, premium and convenience including some quite transformational product ranges launched during the year.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Just to pull a few out, we launched a full range of heritage gold pork in M and S, this was using a specific breed that we had selected for eating quality through higher intramuscular fat. We actually in a similar format relaunched Tesco's finest pork with a similar treatment with the Durock pig again selected for eating quality and Sainsbury's taste the different super premium sausages have been relaunched going very much back to the roots of the original Simply Sausage recipes using fresh ingredients and natural casings and also a very iconic range from the Yorkshire Baker business working in conjunction with Tom Kerridge for some premium gastro meals for Marks and Spencer's. We're also bringing on additional capacity throughout the group supporting this growth underpinning our confidence that we will continue to grow there. So moving over on the page on to Page 22 and just looking at the kind of shape of that volume led growth. So fresh pork sales were up 4% on the year, retail sales actually driving most of that growth particularly via the performance of Sainsbury's and Tesco's that I've mentioned and the overall volume there up 9.4% reflecting that reduction in the cost of rearing pigs and the pig price year on year.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Sales in convenience grew up top line which is pretty pleasing despite the loss of that discount to volume that Mark mentioned earlier and actually an impact of a temporary import ban at continental and German products in Q4 which has since been recovered and we are now shipping as normal. We are incredibly well set for growth in this business and actually that lost volume has now been replaced at cooked meats with a new customer on boarding and actually that's aligned to a long term deal as well, so much better quality and more sustainable business that we have replaced that for the year ahead. We've had a superb performance in gourmet aligned to that premium growth I mentioned at plus 8.8% as premium ranges outperform. Our sausage and bacon business has done particularly well in the year with record volumes over that key festive period, actually packing 78,000,000 pigs in blankets this year but for the first time some of those have been automated and going forward we will be 100% automated on our pig in blanket production. We grew with additional volume in McDonald's to support their breakfast with cooked bacon as well as an expansion in our range of retail ready to eat cocktail sausages leaving volumes up 12% overall and Yorkshire Baker performed extremely well with some of those iconic products I mentioned in M and S most notably the Tom Kerridge meals that sold so well that we were literally securing every single beef cheap we could get that was approvable for an M and S supply chain.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Our poultry business grew by 20% with an increased number of birds processed at eye up to 1,600,000 at peak and a new value added customer in breaded and cut being on boarded with The UK's largest retailer. Cranswick Pet Products sales were up by 47.8% and if compare that to the volume change that really highlights the quality and better quality sales and a better mix there with more premium supporting that pets at home volume as well as new volume awarded in phases two and three of the pets at home business as well as the development of a new range called NutriBalance. Re looking at this from a channel perspective, retail sales leading the charge up at 7% and very much even though that's our biggest channel taking an ever increasing share of group revenues. Manufacturing sales were down that mainly reflects the diversion of that meat into our further processing business rather than selling to third parties in the wholesale market. Food service over the period has been quite a challenging at a macro level with the pressure on ingredients, labour and utilities all clashing with a constrained consumer.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Consumers as I mentioned earlier are consuming more calories in the SOME and the QASR sector is finding there is a bit of a price ceiling that the consumer is willing to pay however it's our view that this market will recover and will become interesting again as cost of living crisis and the likes of it works its way through the system. We are very much in the same format as the retail space, we are aligned to the best performance in particularly McDonald's but also Greggs. Export sales rose by 8% particularly driven by the reinstatement of the China license in Q4 with increased volume of China being shipped from the January, increasing the number of loads per week from about around 170 containers per week per month to around two forty containers. So over the page on to 23 just looking at the outlook and the outlook for next year looks extremely positive with growth opportunities again in all categories based upon our strategy of building long term customer partnerships, leading innovation and iconic and differentiated product ranges. In our core pork related categories we have secured and grown our business with Sainsbury's on a ten year deal, we've embedded our business further with M and S again on a long term agreement and Yorkshire Baker has been awarded what they call a fortress factory status which is for those really important businesses that add differentiation and value to M and S and that will be supported on an open book model underpinning the margins there and we are actually growing our business even with the discount of the likes of Lidl on long term arrangements linked all the way back to the production and the cost of producing pigs.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Obviously that export licence at Wotton being reinstated, Caesars fit with the full year effects of that and moving on to chicken and continental, so at the beginning of this financial year we began on boarding a new ready to eat chicken contract for a premium retailer and this will step change volumes again at both the value added chicken facilities in breaded and cooked. This has been very much innovation led with the removal of all ultra processed ingredients which have been replaced with all natural marinades. We've expanded again the Ramona's range for summer this year with several selection packs and exclusive ranges for our two largest customers and also in the Conti category we've been awarded sole supply of all of Morrison's continental meats bringing on the two power categories in that area the Spanish and the Italian ranges. The pet business is place to grow again with the full year effects of that business that was on boarded in the last financial year as well as some really strong category growth plans aligned as well as some new and exciting innovation planned within this category during next year. We have now agreed our first new own label contracts for Hummus and Dips, one of which is already launched and the other will be on boarded at the September when the new Worsley site capacity is completely on stream.

[Jim Brisby, Chief Commercial Officer at Cranswick]

And finally, as announced yesterday, we've acquired a new food service, sausage and bacon cooking operation, which complements our Gourmet Kitchen business bringing on new capability in frying as well as extending our convection oven capacity as well which is much needed. Greggs is the anchor customers there and a clear market leader in that QSR breakfast space is certainly the one to be backing from that point of view. So on that note, I will hand back over to Adam to take us through the strategic review. Thank you.

[Adam Couch, CEO at Cranswick]

Yes. Thanks, Jim. I'll briefly go through the strategy. We presented it, as you will recall, not even a couple of months ago at the Capital Markets Day before quickly moving on to Q and As. So on Page 25 here, the growth strategy continues to build on the key strengths of the business, and this has remained consistent over many years, as you'll be aware.

[Adam Couch, CEO at Cranswick]

We'll continue to grow the cash generative nature of the core range through the focus on affordable and healthy proteins. We added value products that resonate with consumers. We'll continue to invest in the supply chain and across the asset base to drive this efficiency. We'll deliver further expansion through the focus on white space, the opportunities and unlocking adjacent categories. We want to extend the operational leadership and increase capacity through the significant pipeline of return on capital employed, enhancing investment projects.

[Adam Couch, CEO at Cranswick]

With increased capacity, we're determined to capture further market share. We continue to diversify and strengthen the business through a focus on the innovation, the complementary acquisitions across our supply chain and across the categories and markets in which we operate. And we'll deliver and drive the expanded categories through diversifying our product ranges. Over the last ten years, we've now delivered compound annual growth rate in excess of 10%. Adjusted profit before tax, earnings per share and dividend per share growth are all comfortably in excess of this 10%.

[Adam Couch, CEO at Cranswick]

With the continued focus we've outlined, I'm confident the strategy of consolidate, expand and diversify will continue to deliver the strong and sustainable compound growth for the long term. And just on final on summary and outlook over the last twelve months, we've now delivered strong revenue growth, strengthened the operating margin and completed several returns enhancing acquisitions. We have a substantial capital investment pipeline with major projects underway across our fresh product range, our poultry and as long as our Mediterranean foods. This totals over GBP 138,000,000. We continue to deploy capital at pace, as Mark alluded to before, across the business with the strong associated returns this offers.

[Adam Couch, CEO at Cranswick]

And we made a positive start to the new financial year with the momentum for the final quarter of twenty twenty five continuing through the first six weeks of this new financial year, reflecting continuing robust demand for our pork and poultry product ranges. And we today announced the acquisition of the Blakenings business, and so our growth strategy remains firmly on track. We'll take questions from the floor, if that's okay, first before moving on to the moderator for any coming from outside the room. Thanks very much. Charles?

[Charles Hall, Head of Research at Peel Hunt]

Charles Hall from Peel Hunt. With the acquisition of Bligmans, can you just comment about that segment, how much appetite you have to expand in that area and what level of spare capacity you've got at their facility?

[Adam Couch, CEO at Cranswick]

Yes, I'll kick that off Jim and then if you there's ample capacity for further expansion there. It's a lovely business. It's the Blaymans business and it's been known to certainly me for well over twenty years or so. It's an area we're underperforming in foodservice generally anyway, so it absolutely complements the wider business itself. And it lends to a lot of our product ranges that we deliver from that fresh pork operations, our three fresh pork sites.

[Adam Couch, CEO at Cranswick]

But I think more than that, it unlocks many customers that we would have historically not focused on or certainly have the intent on pursuing. And so I think from that point of view, it gives us a huge inroad into that foodservice arena, not just through acquisition, but obviously from an organic growth from that site as well. I don't know whether you want to comment on that, Jim.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Yes. Probably the only other thing is just the access to markets. I think their distribution channels are somewhat different to us to get to more kind of disparate customers that we can deliver with kind of full trucks and that kind of thing. So I think it will be very complementary and obviously the Greggs would be a common customer on both sides of the business. So I think it's a very good strategic fit in the market, as Adam says, where we've got for many years have had we've been underway and have ambition to at least maintain and grow at the same pace as the rest of the group, I'd say.

[Charles Hall, Head of Research at Peel Hunt]

And is there an opportunity to improve margins with internal supply?

[Jim Brisby, Chief Commercial Officer at Cranswick]

We already actually supply Blakeman's quite an amount of raw material, hence the kind of long term relationship we've had with the guys. But I think certainly what it will allow is that kind of model of more stable margins as we've done elsewhere with kind of back to backing and understanding the margin all the way through rather than being too market related. So I think it will be certainly stability play, I would say for sure.

[Charles Hall, Head of Research at Peel Hunt]

One other question, Adam, if I may. Just we obviously discussed the poultry or potential poultry expansion at the Cattle and Marks Day. Can you just give us an update on latest thoughts given it tends to move quite quickly in planning permissions?

[Adam Couch, CEO at Cranswick]

Yes, yes. I mean, it's still a huge frustration, as you know. I think Tim alluded to it in his commentary on the results as well. We continue to engage at every level. We're looking at a number of different geographical footprints now in which to expand the poultry operation I have one or two live discussions going on at the moment, but these do move at glacial pace, unfortunately.

[Adam Couch, CEO at Cranswick]

And we've yet to see any improvement in the planning system of any note, but we do push at an extremely high level fortunate with Tim's connections in government as well. That message is pressed home at every single occasion that we can possibly get in front of ministers and stakeholders.

[Charles Hall, Head of Research at Peel Hunt]

Lovely. Thanks.

[Damian McNeela, Director at Deutsche Numis]

Thank you. Good morning, everybody. Damian McNeither from Deutsche Numis. First question, over the last sort of couple of years, we've seen a really strong performance of premium private label products. I'm just wondering what sense you have that, that momentum can continue and whether you can sort of give sort of an indication of what proportion of the growth has came from premium this year, please?

[Jim Brisby, Chief Commercial Officer at Cranswick]

Yes. I mean I think we've been saying that for about fifteen years, haven't we?

[Adam Couch, CEO at Cranswick]

You'd be right

[Adam Couch, CEO at Cranswick]

one of

[Adam Couch, CEO at Cranswick]

these days.

[Jim Brisby, Chief Commercial Officer at Cranswick]

So now I think there's if you take, as I mentioned, M and S's performance, I think where they're presenting consumers with food, which is as good and as interesting as they continue to do. If we can kind of match that, you'll see as normal a range of some of our innovation over the last twelve months. Consumers have a huge appetite for more interesting and better quality foods. And I think what we're seeing as well is combining premium and health.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Those kind of talk about premium health and convenience. They're not exclusive. You can actually develop products with a combination of all those and if you take that healthy protein play overlay that with quality products you're hitting the kind of sweet spot in the same way if you can mix health and convenience really helping shoppers meet their needs. I think my overall comment would be we spend such a small amount of our overall income on food. I think that really leads to the ability to premiumise particularly in the affordable categories of pig and chicken so you know it's very much in that affordable premium space but you know some absolutely superb products at the back of the room which don't cost a nom and a leg.

[Adam Couch, CEO at Cranswick]

I think the increasing recognition of the value of good quality protein in a diet is actually a landing home. If you think for the last fifteen, twenty years we've sat here, we've seen the advent of meat free alternative proteins, They've kind of fallen away, so there is a general acceptance of the necessity of having good quality proteins in a balanced diet. And if you consider the two proteins that were involved in, Damian, pig meat and poultry, they're both affordable and really lend themselves to premiumization. And just look at it from a carcass equivalent point of view, you've got cattle trading at 7.5 a kilo. You've got lamb not far off there, then you dropped a pig meat at 2.5 a kilo and poultry at 1.6 pounds 1.7 So it lends itself to those key categories that we're involved in very much so in terms of premiumization.

[Damian McNeela, Director at Deutsche Numis]

Okay, very clear. And perhaps just one last one on M and S and just what you're doing to sort of support them through the sort of issues that they've got on the supply chain side?

[Jim Brisby, Chief Commercial Officer at Cranswick]

Yes, I mean I suppose our job is just to keep them in supply. So I think overall volumes into M and S have been pretty steady and consistent with what we would normally put in. Clearly they've got a lot of challenges there and in terms of getting it to the right stores at the right time. But given the situation I think they are doing an exceptional job actually and if you go in stores as I did this weekend you wouldn't massively know as a consumer the stuff is on the shelf and they doing a fabulous job actually.

[Damian McNeela, Director at Deutsche Numis]

Different to co op, that looks totally different.

[Matthew Abraham, Vice President, Equity Research - Consumer at Berenberg]

Morning all. Thanks for taking my questions. Matthew O'Brien from Berenberg. Just first question is just in reference to the CapEx step up next year. You provided a bit of a split of efficiency and growth for CapEx this year at the half year.

[Matthew Abraham, Vice President, Equity Research - Consumer at Berenberg]

I was just wondering if you could divide that $150,000,000 for next year between efficiency projects and growth projects please?

[Mark Bottomley, CFO & Executive Director at Cranswick]

Yes, somewhere between 6070% of our CapEx generally is earnings enhancing. So whether it's capacity, expansion, capability build or automation and efficiency driving that. And that has been pretty consistent over several years. And when you look at the scale of the big projects that we've called out today and we've been consistently calling out, they are big sort of growth projects. And that is the majority of what we are of that major CapEx bill.

[Mark Bottomley, CFO & Executive Director at Cranswick]

If you look at you know, we need a lot less than that to keep the business ticking over. But even then, when we talk about maintenance quite often, it's replacing kit with latest generation kit where you'll get faster throughput speeds, better yields, lower giveaways. So there's that constant, know, that's why we depreciate aggressively because we know we're gonna be turning the kit over pretty pretty frequently. We've got the balance sheet and the cash resources to do that, and so we can and do replace at pace. But there is a lot as you can see, there is a lot going on across the business, and we've got a very, very strong pipeline of earnings enhancing CapEx as we look forward.

[Matthew Abraham, Vice President, Equity Research - Consumer at Berenberg]

Okay, that's helpful and then I guess as a follow on from that given there is a consistent split but a step up in the quantum of CapEx is the guidance then for a small dilution in EBIT margin a reflection of the significance of some of those labor cost headwinds that you're facing or is there prospect of upside risk to that guidance?

[Mark Bottomley, CFO & Executive Director at Cranswick]

I think always that margin guidance is our medium term guidance. I don't think we want to look at the next six months in isolation let's say. We had a strong out turn for this last financial year as Jim mentioned, record Christmas trading which was very strong But I think over the medium term, about 7.5 is where we expect to be. I don't see it as dilution far from it. Clearly, when there is a big sort of tail end of immature projects, It has an impact but we've had that for some considerable time yet we've been stepping our ROCE.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Our ROCE has been improving almost quarter on quarter, certainly year on year. And when you look at that £138,000,000 that we spent this year and still improving our return on capital employed it shows that that level of investment is driving strong returns.

[Matthew Abraham, Vice President, Equity Research - Consumer at Berenberg]

Great, thank you. I'll pass it on.

[Clive Black, VP & Head - Consumer Research at Shore Capital]

You. Clyde Black from Oopshaw Capital. Three, if I may. Firstly, I mean, it'd be remiss to not say that's an outstanding set of results, but there's always room for improvement. How do you see the prospects in the convenience division, which like the rest of the other categories please?

[Adam Couch, CEO at Cranswick]

Jim do you want cover

[Jim Brisby, Chief Commercial Officer at Cranswick]

I mean I referenced it a little bit in my monologue but we stepped aside or decided not to continue with a certain piece of business that wouldn't have had margins that were palatable. We've since replaced that volume which came on stream very recently and there was a headwind from that export ban on the German stuff at Conti, which is a big, big it's the spine of the volume in terms of the products that we slice as well. So it had quite a big impact there. So I think we're well set up for a different set of numbers next year.

[Clive Black, VP & Head - Consumer Research at Shore Capital]

And then Greg's talked about 6% cost headwinds this year. And given we're only six weeks into Rachel Reeves' new paradigm and the COGS environment, how do you see your cost environment in the next year?

[Mark Bottomley, CFO & Executive Director at Cranswick]

I think again as Jim mentioned we knew about the national living wage and national insurance increases back in November. I think it was new news when we when we were sat here six months ago. And, the commercial teams and and Jim can, you know, sort of talk with with far more, clarity and and detail on this. The mica sees at the coalface of all that stuff. That that that those discussions started straight away.

[Mark Bottomley, CFO & Executive Director at Cranswick]

We have, as as we continue to mention, we have models in place, cost of production models. So clearly, there is some there there you know, detailed and lengthy discussions in all of those areas, but we're well placed as we, you know, as we now enter the new financial year. But certainly, those cost headwinds, you know, we've we've had to manage those, Clive, and we we talked about a very significant on cost when you've got well over 15,000 people in the business. That step change in national insurance and the step up in national living wage and associated wage increases that follow on from that is significant.

[Clive Black, VP & Head - Consumer Research at Shore Capital]

And then lastly, I mean I have to say for a FTSE two fifty company to make the comments that Adam and Tim the Chairman did today is quite remarkable. What is it you want from what is admittedly a dysfunctional British government? And what would that actually mean to shareholders if some things come through? Because to repeat, they are profound comments from a list of businesses we're making about The UK state.

[Adam Couch, CEO at Cranswick]

Yes. It comes down to planning again, Clive. It's quite extraordinary. As you know, I've spoken at length on this. We're looking to deploy capital best part of GBP $05,000,000,000 in the poultry sector.

[Adam Couch, CEO at Cranswick]

This is a sector that hasn't benefited from significant investments since our site was built back in 2019 and into 2020. The £05,000,000,000 will be spent within the farming sector as well as in the processing side of the business. Highly frustrating not to get us, especially at a time when stocking densities have been decreased. So even to stand still, there will be 20% more space required. And without planning, it just becomes extremely, extremely difficult.

[Adam Couch, CEO at Cranswick]

So that is the unlocking that they've been promising since coming to power over the last June, July time, whatever it was. So those will be the key area. If you want growth and we're looking to employ significant amount of capital and employ best part of 3,000 people in a sector that's growing, it just doesn't seem to make sense, especially when you put it in the context of the trade deals in The U. S. Where they're trying to unlock chlorinated chicken and the likes coming into The UK.

[Adam Couch, CEO at Cranswick]

We're only 65%, seventy % self sufficient in poultry, 50% in pig meat. We must be better than that. We have to be better than that. And so we just keep pressing the cases in every available format we can. I don't know whether you want add anything to to that, Tim, really that we haven't already discussed.

[Tim Smith, Non-Executive Chairman at Cranswick]

For us is very positive. Export opportunities are bigger than import risks. But Adam Adam's frustration is is born out every every time we get into a planning discussion.

[Adam Couch, CEO at Cranswick]

So nothing more to add. Thank you.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Ashton?

[Ashton Olds, Vice President - Equity Research at Redburn Atlantic]

Hi guys, Ashton Olds here from Redburn. My first question I suppose touches on what you've just discussed it's just around imports. I suppose there's bit of noise coming out of The USA trade agreement. Sort of when I looked through the HMRC data, I think the clear standout is the amount of Polish poultry which is coming into the market now. And I appreciate that some of that's probably because of the supply constraints in Britain.

[Ashton Olds, Vice President - Equity Research at Redburn Atlantic]

But I suppose I'd be keen to understand how your customers think about the trade off of longer lead times, possibly cheaper prices, the attitudes more broadly to it. If supply increased, would that Polish import go away? Just any thoughts you may have there?

[Jim Brisby, Chief Commercial Officer at Cranswick]

I think you answered the question yourself, the drive for Polish was purely around availability. So it wasn't around the retailers' desire to source from that region but purely needs most of where the constraints in the supply chain eventually manifested themselves.

[Ashton Olds, Vice President - Equity Research at Redburn Atlantic]

And then my second question is just around the export business. Historically, there was some chatter about bolstering this business, more boots on the ground and sort of developing more trade agreements with overseas partners. I suppose not having the Norfolk license over the past few years has been disruptive and then equally the Chinese pig prices come down. But how are you sort of thinking about the progression of this business over the next sort of five years or so?

[Adam Couch, CEO at Cranswick]

Yes, the opening up of the Chinese export market, whilst not as lucrative as it once was, was absolutely vital to that business and the consistency of supplying to China being a very key area for us. So it does deliver significant improvement, having got that export license recovered. I mean we welcome the trade deal that was discussed yesterday. In fairness, that will cut the red tape if it does get delivered. And there'll be significant cost implications there, but the devil is in the detail, of course, and the timing of it is to be questioned.

[Adam Couch, CEO at Cranswick]

But we're pretty good on our exports. We punch above our weight in terms of export. We've got about onethree of the market of pigs to be processed, but we'll probably represent half of all the volume of export into from an export trade out of The UK on pig meat. So it's an area that we do focus on extremely heavily, even into The U. S.

[Adam Couch, CEO at Cranswick]

Despite the trade tariffs. We still have a good impact in some of those regions.

[Mark Bottomley, CFO & Executive Director at Cranswick]

I think, Ashton, just adding to that as well, of course, with our planned increase in capacity as well, that 35,000 to 50,000 pigs in due course at Preston, a third of the weight of every carcass is exported, so that will drive stronger export sales when that additional capacity comes on stream in due course as well.

[Adam Couch, CEO at Cranswick]

I think what is important to note on that site as well, the site that Mark is referring to, the investment that is currently going in there, which the best part of GBP 100,000,000 over a three year basis will improve automation and cold storage and help mitigate a lot of the cost increases that we're seeing in the wider business as well, make it super efficient. It's a 7,000 pallet cold store that we're building with an automated blast freezing facility. So it will add significantly to the efficiencies that we're looking to unlock.

[Ashton Olds, Vice President - Equity Research at Redburn Atlantic]

And then my final question is just a follow-up on what Charles was asking earlier around the poultry supply chain. Does sort of the delay in that one planning application or rejection rather, does that stop plans for a second fresh processing site in Ai or does it sort of just put it on ice for a while?

[Adam Couch, CEO at Cranswick]

No, we're progressing. We're progressing all these. As you know, we've been thwarted in a couple of planning applications in and around the past. We still continue as normal. There's small beer in the grand scheme of how many farms that we do operate in.

[Adam Couch, CEO at Cranswick]

But no, we're still progressing on about three different geographies. So it could be one or two, but I mean the timing of this is very difficult to

[Adam Couch, CEO at Cranswick]

call.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Andy?

[Andrew Wade, SVP Equity Research at Jefferies Financial Group]

Thanks. Andy Wade from Jefferies. Continuing the theme of poultry and planning. How much sort of runway have you got to keep delivering sort of double digit growth in poultry? And when does it become a problem that you're not going to be able to keep delivering that because of constraints?

[Andrew Wade, SVP Equity Research at Jefferies Financial Group]

And following on from that, how confident are you, you can get it? And what sort of lead times do you need in order to sort of keep delivering on that front? So those sort of interlinked questions on the poultry planning side.

[Mark Bottomley, CFO & Executive Director at Cranswick]

Yes. So I think in terms of the pipeline of growth, Jim alluded to the new contract, which is new retail contract in other value poultry, which has just started in the last few weeks, and that is significant and will give us very strong growth during the course of this year and then be annualizing into FY '27. And then we talked about the CapEx investment at both the Eye facility itself and the associated incubatory capacity at the Kenninghall site as well, which will be complete, which is scheduled to be completed by the end of this financial year and will give us that step further step change in primary processing capacity through FY '20 '7 and into FY '20 '8. So there still certainly is a strong growth pipeline but at some point we will need that additional capacity. You look at from putting spades in the ground to building the site it's eighteen to twenty four months realistically.

[Mark Bottomley, CFO & Executive Director at Cranswick]

We might do it faster given the experience we had from I itself but ideally we'd like to be getting that approval sooner rather than later so we can start that process whilst we're still very much in growth mode. Yes, I'll hand over to Ademila.

[Adam Couch, CEO at Cranswick]

Yes, I it's very sound. If you had a plant today that was doing 2,000,000 birds, you would sell that product overnight. The demand is there, the growth is there, The capability we've got is there as well. We've got a fantastic management team in that business. And you would have customers at the moment, you've seen a number of retailers bringing in from Aston's earlier comment from Poland.

[Adam Couch, CEO at Cranswick]

You've got product coming in from Germany, then packed in The Netherlands, that isn't sustainable. This is a short shelf life product. You've got eight, nine days life on this. You're losing two of those in that cold chain. So it's important that we start supplying from our own and become more self sufficient.

[Adam Couch, CEO at Cranswick]

It is as you can see, I'm really passionate about it, but it just does not make sense what this unlocking of the planning system does have to absolutely happen.

[Andrew Wade, SVP Equity Research at Jefferies Financial Group]

Great. Thanks. Good color. Thank you. And then follow-up one, I think, probably for Mark, but GBP 150,000,000 of CapEx, so near 20% ROCE and GBP 200,000,000 of operating profit or PBT.

[Andrew Wade, SVP Equity Research at Jefferies Financial Group]

How just sort of mathematically, how do we get down to 5% EPS growth?

[Mark Bottomley, CFO & Executive Director at Cranswick]

The

[Mark Bottomley, CFO & Executive Director at Cranswick]

question you're asking there, everybody, I guess, is interesting. Look. You know, we we've always, you know, sort of set out, you know, targets that we believe we can deliver on. There is a lot of CapEx. You know, there is risk associated with that CapEx.

[Mark Bottomley, CFO & Executive Director at Cranswick]

There's risk associated with as as we we've clearly seen in in risk and reward in becoming bigger farmers as well. I think we have to balance all that out. If you look at our historic track record, you know, and and Adam called it out, compound annual growth rates are over 10% consistently over the last decade and beyond. Look. We'd love to be talking about that as our forward guidance.

[Mark Bottomley, CFO & Executive Director at Cranswick]

We'll we'll certainly do our best to try and deliver it, but I'd rather be chasing forecasts that we believe we can deliver rather than chasing something that proves to be unattainable. And that's very much how, you know, we've always operated, you know, under promise and over deliver, and that's how we're going to continue to to guide and run the business going forwards.

[Andrew Wade, SVP Equity Research at Jefferies Financial Group]

Very helpful. Thank you.

[Gary Martin, Equity Research Analyst at Davy]

Gary Martin here from Davies. Just a couple of questions from me. Just maybe moving away from poultry for a second and just talking about the pet food business. So I see that you've added additional capacity. I just think it would be useful at this stage to get an idea of what kind of surplus capacity you have relative to where your nameplate is at the minute and whether you hope to potentially onboard further new business beyond what you've talked about in terms of the Pets at Home pipeline?

[Gary Martin, Equity Research Analyst at Davy]

That's my first question.

[Adam Couch, CEO at Cranswick]

You're on that or may Jim? You're very familiar. Yes. I mean we've been successful in securing new extra volume from pets. That will take our capacity up pretty much once we've done the CapEx investment there.

[Adam Couch, CEO at Cranswick]

So anything further than that, we would need a further ramp up in investment on that operation or we'll look elsewhere on an acquisition basis. But we'll be pretty much utilized the full extent by probably the end of this year, Chris, think is my guess, isn't it?

[Gary Martin, Equity Research Analyst at Davy]

That's right.

[Gary Martin, Equity Research Analyst at Davy]

That's color. And then just maybe another one, just a bit of a high level one, on the recent proposed UK citizenship changes in terms of the requirements there. Is that any kind of a headwind for Granswick? Or what's your thoughts on that?

[Adam Couch, CEO at Cranswick]

Yes. The detail of this hasn't yet hasn't yet been flushed out. We understand that the qualifications in order to work for us move what was called an RQF3 to an RQF6, which is goes from A level to degree level educated. We'll cover it for the time being. There's no pressure in the short term on that, but that could prove a degree of headwind, but we're more than comfortable that we've got that covered the big benefit that we had over the last three to four years, as you will recall, is Philippine Butchers coming into the business that are not just in our butchery area business, but are in our sites, but also on farm now as well.

[Adam Couch, CEO at Cranswick]

So we're pretty well covered on that front. So it's not a pressing issue at this stage, but we'll have to wait and see what the devil in the detail is.

[Gary Martin, Equity Research Analyst at Davy]

Indeed. Thanks. I'll pass it on.

[Adam Couch, CEO at Cranswick]

Thanks.

[Matthew Webb, Consumer Analyst at Investec Group]

Matthew Webb from Investec. Two questions please. First on self sufficiency in pigs, up at 55% now. I mean as you continue to grow your business, can you maintain it at that level or even push it higher?

[Matthew Webb, Consumer Analyst at Investec Group]

Are there assets out there for you to continue to grow your farming operations or indeed expand your existing ones? That's the first question. And the second, just on the CapEx. If we're looking at $140,000,150 going forward, are there any logistical practical difficulties of spending at that level in terms of availability of equipment, staff to to fit it, etcetera, etcetera. So I know there have been in the past.

[Matthew Webb, Consumer Analyst at Investec Group]

Are we entirely through that?

[Adam Couch, CEO at Cranswick]

I'll cover both of these off, if I can, Matthew. The peak self sufficiency, we've never set ourselves a goal that we must be at a certain percentage, as you recall. We've indicated in the past that, that could actually drop and it probably will do with the increase in productivity levels that we can achieve out of our operation in East Yorkshire. So it's not a goal. We've got a good level there.

[Adam Couch, CEO at Cranswick]

I think it's probably limited what more we could do in an acquisition format because of the assets that we've acquired over the years have needed a significant amount of investment. And Rick, who is in the room today here, is really responsible for putting all that investment into those operations. So you'll probably see some degree of organic growth there, but probably unlikely to be anything major in acquisition terms that just simply aren't out there. In answer to your question, Matthew, on CapEx, doesn't seem to struggle spending the money if truth be known. He's very adept at it.

[Adam Couch, CEO at Cranswick]

So we can manage to get it. Sometimes timings are sometimes challenging to get them in any particular year and they can run bleed over into another year, but it's not something we've got some really hungry teams out there. The way we organize our business in its autonomous format means the guys have really dedicated to spending that money when in that given year. So he's not shy of having guys knocking on his door saying we need to move this forward. So it's a pretty well won path.

[Mark Bottomley, CFO & Executive Director at Cranswick]

And I think it's fair to say, just adding to that as well, you can see from the second half of this year almost that sort of caucus sort of pops and we spent £47,000,000 in the first half didn't we and 90,000,000 or so in the second half just highlighting that that sort of does supply chains and equipment lead times have eased and that's certainly been helpful and gives us the confidence that as we look forward into new financial year with the pipeline of projects we've got you know we can deliver all those. Mean as said the business is getting a lot bigger and, you know, and and and that creates opportunities, as Adam said, with the team that is very hungry, know, in in in every case to drive that business forward.

[Matthew Webb, Consumer Analyst at Investec Group]

Thank you.

[Analyst]

Thanks. It's Andrew from Peel Hunt. Just a couple from me. Firstly, Jim, on the meat consumption trends, I just wondered if you could give us a bit of an insight as to how per capita consumption has maybe changed over the last five years, if yes, and maybe how it's if there's any other kind of variations within that. So and then the next question, I'll come back to that one if does that make sense?

[Analyst]

You look like you're puzzled

[Jim Brisby, Chief Commercial Officer at Cranswick]

by I'll

[Analyst]

Yes, I'll start with that one then.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Yes, I mean the basic view is meat consumption has actually been relatively flat. It's such a fundamental point of our diet, but relatively small changes are quite a lot of volume material so obviously there was a lot of noise in the media about moving away from meat and moving to meat replacements it wasn't particularly material on what the average person on the street did you know these are staples to our diet and foods you know Adam and I often talk about the food we can assume changes generationally, not year by year, but the trends are upwards and significant from an overall volume perspective is probably the way to characterize it.

[Analyst]

Thanks Jim. Next one, just on the margins, I wondered on the outperformance this year, how much of that was contributed to the export business coming back and then maybe the contribution from the other verticals and efficiencies, if you can?

[Mark Bottomley, CFO & Executive Director at Cranswick]

The export impact was very modest because it was only right at the end of the financial year effectively from from January onwards. So we got a quarter's benefit. And as Adam said, whilst we're very, very pleased to to get it back, it's not quite it doesn't have quite the same impact it would have had three or four years ago. I mean, the loss margin over the last four years is probably more of a talking point than what, you know, what it's contributed in the last in the last, you know, in the last three months. But it certainly will be helpful to us looking ahead particularly as we've seen prices strengthening a little bit as well.

[Mark Bottomley, CFO & Executive Director at Cranswick]

You know that is that's played its part but it's it's been a confluence of many factors look at the very strong trading performance over the Christmas period The the from our expanded farming operations and the work that Rick and the team have done there. The operational performance with that investment in CapEx and automation. And then just that constant drive to premiumize, to add value to the meat that we're processing. Jim again called it out more of more of that primary meat that we're processing being diverted internally into the business to add further value and to drive further margin improvements as well.

[Analyst]

Great. Thank you. And then just lastly on the foodservice and I guess following the recent announcement of the acquisition of Blaken's, I just wondered how you expect to kind of orientate yourself to that market. Is it to kind of map current the current overall? Or is it more towards obviously, you talk a lot about premium.

[Analyst]

If you're moving more towards self-service, I expect that there's a risk that you could over spec relative to market? Or is the market coming to you sort of just how do you think how are you thinking about that at this sort of early stage? I know it's small.

[Adam Couch, CEO at Cranswick]

Yes, sorry Jim you go ahead.

[Jim Brisby, Chief Commercial Officer at Cranswick]

Yes, mean in general I suppose we think of it in terms of individual customers rather than the market as a whole and that's where you then spec products appropriately. So you know we're in the same way we view retail we like to target the market leaders you know if you take the pet division that's what we've done there, tried to be as strategic as possible pick off the market leaders and make products that are appropriate to them so I think that will be how characterise that. But I think the acquisition will be a learning curve as well they're certainly more adept at this market than we may be so we will look at where they have customers and various other products within the group in terms of that, do you remember that white space map we did, imagine that for food service where we do a lot of chicken and food service but we don't do so much of something else, so that's how we would orientate ourselves with that as well.

[Adam Couch, CEO at Cranswick]

And I think that's where the group structure really comes in, the autonomous format that we're running to, Chris and the team were there yesterday just doing the intros for it, but it will run-in a stand alone format. We'll have a lot of support from the center where it's required, but this is already a very successful business. We can add capital and some connections and ability that can make it more so, but it is a great business anyway. Thank you.

[Executive]

We have one question online from Roland French of Penman Securities. You've spoken about the autonomous nature of Cranzwick's organization setup. Can you expand on this and outline what incremental responsibilities are being pushed down to the business units?

[Mark Bottomley, CFO & Executive Director at Cranswick]

Don't think there's been any change to how we structured the business over the last it's our fiftieth year since since the business was incorporated this this coming year. And I think what Kronswick has been able to do is stay very true to those original ideals and that ethos. And, you know, Jim, Chris, Adam, and I have continued the culture and built on the culture that was developed all those years ago. So I don't think there has been a particular change where we push more down. They've all all our business units and the leaders leadership teams within those businesses, many who've been here in and in the business almost as long as some of us have, You know, they have a great degree of autonomy.

[Mark Bottomley, CFO & Executive Director at Cranswick]

They come to us with ideas rather than us just pushing those ideas down to them and that's a model that works incredibly well and one that we want to continue to, you know, to cherish and to foster as we get bigger and as we grow the business and Blakenham's will be the latest you know the latest iteration of that where a strong management team that's run a business very well as Adam said will invest, will provide them with the additional resource they need to make that business even better, but we won't sort of put the Cranzwick blueprint all over it on day one and change that culture because that's never how we have done things.

[Executive]

Thank you. There are no further questions online.

[Adam Couch, CEO at Cranswick]

Unless there's any further questions in the room, thank you very much for everybody. Thank you.

Participants

Executives

• Adam Couch, CEO
• Mark Bottomley, CFO & Executive Director
• Jim Brisby, Chief Commercial Officer
• Tim Smith, Non-Executive Chairman

Analysts

• Charles Hall, Head of Research at Peel Hunt
• Damian McNeela, Director at Deutsche Numis
• Matthew Abraham, Vice President, Equity Research - Consumer at Berenberg
• Clive Black, VP & Head - Consumer Research at Shore Capital
• Ashton Olds, Vice President - Equity Research at Redburn Atlantic
• Andrew Wade, SVP Equity Research at Jefferies Financial Group
• Gary Martin, Equity Research Analyst at Davy
• Matthew Webb, Consumer Analyst at Investec Group
• Analyst
• Executive