Cranswick chief executive Adam Crouch has underlined the “game-changing” importance of a £31.7 million buy-out of a major pig farming enterprise across the Humber Bridge.
Speaking fresh from the posting a trading update revealing a 12.3 per cent increase in revenues for the past half year, with volumes up across the board, he stressed how the addition brings supply security, and continues its strategy of adding further vertical integration. It comes against a backdrop of declining numbers in the 海角视频, European and global markets.
The deal for Elsham Linc - the Godfrey family operation - closed in the period, bringing 8,000 sows and a 3,200 pig a week supply into the FTSE-250 listed Hull business. It was described as further diversifying the group’s pig farming operations, while adding an additional feed milling capability, with self-sufficiency in 海角视频 pigs now over 50 per cent.
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Reflecting on the positive contribution the rapidly expanding operations are making, Mr Couch said: “A key element is the farming infrastructure. Over 50 per cent of pig rearing now is covered, which is a game changer for us. It gives us greater control, we now have three feed mills, and they are all contributing to broadly positive growth in the marketplace. All four categories have seen volume growth as well as revenue.”
Elsham Linc comprises 18 farms, with a joint venture on one, Mere Pigs, with Beechgrove Farms Ltd.
On the deal, Mr Couch said: “It was something we had looked at for some time. We feed all our poultry, but not our own pig requirements, so it is a really important acquisition for us.”
It comes as pressures on the industry see a reduction in pig breeding numbers, with Mr Couch citing a 15 per cent decline year on year.
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“Vertically integrating brings security and control,” he said. “Spikes in feed prices due to the Russian invasion of Ukraine, labour difficulties and the ageing nature of farming community all contribute to the reduction. We have had to take more responsibility.This will be something seen across Europe, not just the 海角视频, and the US as well. It is very important we continue our investment in farming infrastructure.”
The company will now bring ‘The Cranswick Effect’ from processing to the farming. “There is development we can do, investment in efficiencies and automation, then in the feed sector, we can align with what we have in processing operations,” Mr Couch said.
“There are 18 farms, each has their own management structure. Many were known to us, and we’re keeping these people on board. We will invest in the feed mill, increase capacity and improve automation. It will be a complete vertical integration, end to end, as the relationship we have with customers is extremely important.”
And he is not ruling out further additions. “We will pause for the moment, but if further opportunities arise we will act,” he said. And location fits well with the company’s maturing Second Nature strategy for environmental sustainability too.
“These 18 farms, bar two, are in a five mile radius which is great for logistics when you consider where we are based,” Mr Couch said. “The docks too are close, to bring feed in, so there are a whole raft of initiatives open to us.”
And it leads into the £62 million multi-phase development of the Preston site, east of Hull, the primary processing hub that supplies into the heavily invested Helsinki Road campus in the city.
“That will help the flow through of the extra volume of pigs as we bring that through in the next few years,” Mr Couch said. “It is a good two year build, and we’re not just increasing throughput, but bringing in efficiency as well.” On-site cold storage capability is also being added.
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Buoyed by analysts’ reaction to the results, he told how it showed the strategy initiated with investment in acquisitions and infrastructure, with automation and innovation at the fore, was delivering. Mr Couch said: “We are pleased with them given the backdrop of the last three years, and the tumultuous nature of what we’ve all gone through.
“In eight and a half years, from a cash flow of £1 billion, we will have spent £600 million on capital expenditure and £200 million on acquisitions. That keeps us on top, and still we maintain our 34th successive year of growth in dividend.
“We have a good long-serving management team, and we do run very autonomously. They know their stuff, and we are super proud of the wider team. We don’t rest on our laurels, there is a lot more work to do, a lot more investment ahead of us. We’d like to grow further in the poultry sector, we have a good stable positioning in pork, and we want to keep investing.”
Substantial additional capacity is also being added to a houmous facility, acquired late last year, in Worsley, Greater Manchester. A £23 million fit out will occupy half of the 50,000 sq ft footprint.