Despite soaring costs in the meat industry, key producer Cranswick is standing by its outlook for the current fiscal year after reporting higher annual profits.
Over the 52 weeks ended 26 March 2022, the group’s adjusted operating profit rose 6.1% to £140.6m on revenue up 5.8% to £2.0bn.
The company noted that it had faced “unprecedented” industry-wide labour shortages and supply chain challenges that are driving up costs. Cranswick highlighted that the price of cereals, which represent 60%-70% of the cost of growing an animal, had jumped by over 50% since the war in Ukraine began.
However, it said that ongoing cost inflation was being “proactively managed and recovered”.
The cost crisis has exacerbated the meat industry’s woes as people cut back on meat consumption due to soaring inflation and changes in eating habits. The well-publicised shortage of skilled butchers resulting from the Government’s post-Brexit immigration policy has also put the sector under severe strain.
Cranswick said today that the government needed to do more to support the struggling pig farming sector. Last week, Tesco said it was providing extra funding worth £6.6m to help producers facing surging costs.
Despite consumers facing a squeeze from the rising cost of living concerns, Cranswick stated that trading in the new financial year had been in line with its board’s expectations.
“Notwithstanding the challenging operating conditions we continue to experience, our outlook for the group for the current year is unchanged,” said Chief Executive Adam Couch.
NAM Implications:
- Still early days re pipeline inflationary pressures.
- (and 50%+ increases in feed costs will take some absorbing…)
- Price increases can and will alleviate some of the problem…
- …but pragmatic suppliers are anticipating 15%+ inflation.
