Slide 1: Results for the 52 weeks ended 25 March 2023
RESULTS FOR THE 52 WEEKS ENDED 25 MARCH 2023
Slide 2: Agenda
AG EN DA INTRODUCTION AND FY23 HIGHLIGHTS ADAM COUCH, CEO FINANCIAL REVIEW MARK BOTTOMLEY, CFO COMMERCIAL UPDATE JIM BRISBY, CCO OPERATING & STRATEGIC REVIEW ADAM COUCH, CEO Q&A DISCLAIMER: Certain statements in this presentation are forward looking statements. By their nature, forward looking state
Slide 3: FY23 Highlights
FY23 HIGHLIGHTS A DA M CO U C H CHIEF EXECUTIVE OFFICER 2
Slide 4: Our long-term trading record
F Y2 3 H IG H LIG HTS OUR LONG -TERM TRADING RECORD ADJ U STED PROFIT B EFOR E TA X 1 (£M) DIVI DEN D PER S HAR E (PENCE) £2,323m 79.4 140.1 £2,009m 136.9 75.6 129.7 70.0 Revenue 33 years of unbroken dividend growth £1,667m 60.4 102.3 55.9 53.7 92.0 90.2 44.1 75.5 £1,005m 37.5 64.4 34.0 57.8 32.0 £7
Slide 5: Financial performance
F Y2 3 H IG H LIG HTS FINANCIAL PERFORMANCE Revenue Adjusted operating profit1 ROCE2 Demonstrated ability to pass through +15.7% +4.2% 15.8% significant cost inflation Stable long-term margins DPS Adjusted EPS1 Free cash flow3 Strong return on capital employed +5.0% +2.2% £149.2m Unbroken dividend g
Slide 6: Commercial and strategic highlights
F Y2 3 H IG H LIG HTS COMMERCIAL AND STRATEGIC HIGHLIGHTS 5 YEAR CAGR Strong revenue growth reflecting inflation recovery with operating margin Compound annual growth improving in the second half of the year rates to 25 March 2023 Broad-based inflationary pressure across the Group’s cost base contin
Slide 7: Cranswick's value creation model
F Y2 3 H IG H LIG HTS CRANSWICK’S VALUE CREATION MODEL PU R POS E Creating great tasting, affordable food; authentically made and sustainably produced OU R GU I DI NG PRI NCI PLES M EDI U M TER M TARG ETS Q UA LIT Y VA LU E Delight the customer Vertical integration Revenue Growth Lead on premium Tec
Slide 8: Financial Review
FINANCIAL REVIEW MAR K BOT TO M LEY CHIEF FINANCIAL OFFICER 7
Slide 9: Financial highlights
FI NANCIAL R EVI EW FINANCIAL HIGHLIGHTS Revenue (£m) +15.7% Adjusted profit before tax (£m)1 +2.3% 2023 2,323.0 2023 140.1 2022 2,008.5 2022 136.9 2021 1,898.4 2021 129.7 2020 1,667.2 2020 102.3 Adjusted earnings per share (p)1 +2.2% Dividend per share (p) +5.0% 2023 210.0 2023 79.4 2022 205.4 2022
Slide 10: FY23 summary
FI NANCIAL R EVI EW FY23 SUMMARY £m FY23 FY22 Change Revenue 2,323.0 2,008.5 +15.7% Like-for-like revenue growth1 – – +14.4% Adjusted gross margin2 13.0% 14.0% -104bps Adjusted operating profit2,3 146.5 140.6 +4.2% Adjusted operating margin2,3 6.3% 7.0% -69bps Adjusted profit before tax2,3 140.1 136
Slide 11: Strong revenue growth
FI NANCIAL R EVI EW STRONG REVENUE GROW TH R EVEN U E B RI DG E (£M) Revenue growth is driven by: • Proactive inflation recovery across all categories +1.1% +3.6% +0.1% • Strong contribution from new customer contracts and new 22.7 product lines 2.7 +1.7% 71.2 • Full year contribution from Pet Produ
Slide 12: Stable margins
FI NANCIAL R EVI EW STABLE MARGINS Adjusted gross margin1, 2 Adjusted EBITDA margin1, 2 Adjusted operating margin1, 2, 3 Average: 13.5% Average: 9.5% Average: 6.6% 10.4% 14.2% 10.0% 14.0% 7.0% 7.0% 13.0% 13.3% 9.3% 9.3% 13.0% 6.4% 6.3% 6.3% 8.4% FY19 FY20 FY21 FY22 FY23 FY19 FY20 FY21 FY22 FY23 FY19
Slide 13: Strong cash generation
FI NANCIAL R EVI EW STRONG CASH GENERATION Net debt (£m) (18.1) (23.4) (20.4) 215.3 (83.9) (101.4) (106.0) (36.3) (16.3) (12.3) March 2022 EBITDA Biological assets Working capital Taxation Net capex Dividends Leases Other March 2023 Net debt/EBITDA Net debt excluding IFRS 16 lease liabilities at Mar
Slide 14: Strong long term cash generation
FI NANCIAL R EVI EW STRONG LONG TERM CASH GENERATION Cash inflow / BAN KI NG FACI LIT Y Free cash flow Net capex Acquisition 1 Dividend paid (outflow)2 FY23 149.2 83.9 (0.1) 36.3 29.1 • £250m revolving credit facility in place with five major banks FY22 158.4 92.4 38.5 32.8 (5.3) FY21 180.9 71.1 10.
Slide 15: Track record of value creation
FI NANCIAL R EVI EW TRACK RECORD OF VALUE CREATION TOTAL CU M U L ATIVE CAPITAL EM PLOYED (£M) AN D ROCE (%) • Proven track record of attractive ROCE whilst continuing to deploy capital via strong investment pipeline Average Capital Employed ROCE • £120m spent on acquisitions in the past five years
Slide 16: Strategic investment continues
FI NANCIAL R EVI EW STRATEGIC INVESTMENT CONTINUES CONSOLIDATE EXPAND £10m Phase 1 of major expansion at Hull Fresh Pork £8m Expansion of production capacity at Bury Continental site £10m Expansion of Milton Keynes Cooked Meats site £8m Investment to double the ‘slow cook’ capacity at Hull Cooked Me
Slide 17: A sustainable capital allocation framework
FI NANCIAL R EVI EW A SUSTAINABLE CAPITAL ALLOCATION FRAMEWORK INVESTING IN THE BUSINESS TO CAPEX OF C . £100M TO ADD CAPACIT Y, SUPPORT OUR GROW TH STR ATEGY CAPABILIT Y AND AUTOMATION MAINTAIN INVESTMENT TARGET LEVER AGE OF GR ADE BALANCE SHEET <2X NET DEBT: EBITDA MAINTAIN PROGRESSIVE COVER OF ≥2
Slide 18: Commercial Update
COMMERCIAL UPDATE J I M B R I S BY CHIEF COMMERCIAL OFFICER 17
Slide 19: Retail sales resilient despite inflation
COM M ERCIAL U PDATE RETAIL SALES RESILIENT DESPITE INFLATION G ROCERY S PEN D BY R ETAI LER 35,000 • High growth in discounters as shoppers focus on price 30,000 25,000 52w/e 19 Apr 20 52w/e 18 Apr 21 52w/e 17 Apr 22 52w/e 16 Apr 23 • Strong M&S performance as demand for “affordable 20,000 treats”
Slide 20: Out of home channel recovery continued
COM M ERCIAL U PDATE OUT OF HOME CHANNEL RECOVERY CONTINUED TOTAL OUT OF HOM E S ECTOR SALES • Pubs and restaurants recovered in 2022 but remain behind 2019 levels • Strong performance in QSR sector due to affordability and broad appeal 2019 2020 2021 2022 Sales £bn £98.1 £50.8 £75.6 £96.4 • Hotel s
Slide 21: Pig prices and feed wheat prices
Pence/kg /tonne Mar– Mar– May– May– 52 weeks ended 25 March 2023 Jul– Jul– Sep– Sep– Nov– UK (SPP) Nov– Jan– Sources: AHDB Market Data, May 2023 Mar– Mar– EU May– May– Jul– Jul– Sep– Sep– Nov– Nov– Jan– Mar– Mar– May– May– Jul– Jul– Sep– Sep– Nov– Nov– Jan– Mar– Mar– PIG PRICES U K S PP VS EU May– M
Slide 22: Pork and chicken remain lowest cost proteins
COM M ERCIAL U PDATE PORK AND CHICKEN REMAIN LOWEST COST PROTEINS AVER AG E R ETAI L PRICE OF PROTEI N S (£/KG) • Chicken and pork remain the lowest cost protein in retail vs 2022 • Recent retail price inflation fastest in chicken and pork in last 12 months 4.64 4.01 • Average beef price includes hi
Slide 23: Strong category sales
COM M ERCIAL U PDATE STRONG CATEGORY SALES Impact of inflation leading to slight decline in overall volume COR E CATEGORY SALES F Y2 3 CR AN SWICK CHAN N EL SALES F Y2 3 Change Category Value Volume Export UK Retail +12% 7% Food Service +44% Fresh pork1 +20.0% +1.0% Manufacturing +40% Manufacturing
Slide 24: Consolidation and driving the core
COM M ERCIAL U PDATE CONSOLIDATION AND DRIVING THE CORE Investment and new business wins support growth FRESH PORK COOKED BACON S LOW COOK • Semi automated butchery investment • Production commenced in April 2021 • Food hero, Kevin Morel, brings unique skills • New retail and food service customers
Slide 25: Expanding our offer: poultry
COM M ERCIAL U PDATE EXPANDING OUR OFFER Driving our poultry business EYE I NVESTM ENT & G ROW TH B R EADED CH ICKEN SITE COM M I S SION ED DEVELOPI NG CU STOM ER R EL ATION S H I PS • Peak capacity of 1.4m birds per week • Production commenced in April 2022 and volumes • Major QSR launch in H2 FY23
Slide 26: Expanding our offer: Mediterranean foods
COM M ERCIAL U PDATE EXPANDING OUR OFFER Increasing our Mediterranean Foods portfolio CAPAB I LIT Y I N CONTI N ENTAL M EATS DEVELOPM ENT OF HOU MOU S AN D DI PS B ROADEN I NG TH E PORTFOLIO • Good growth momentum from new business wins • Significant distribution gains for Ramona’s brand • Redesign
Slide 27: Diversification: growing our pet food business
COM M ERCIAL U PDATE DIVERSIFICATION Growing our pet food business Cranswick Pet Products (formerly Grove) acquired in January 2022 Heads of terms in place for long-term supply agreement between Cranswick and Pets at Home Producing a range of dog food for Pets at Home owned brands Supply commences i
Slide 28: Delivering our ESG commitments
COM M ERCIAL U PDATE DELIVERING OUR ESG COMMITMENTS 11 SITES WITH SOLAR INSTALLED BOARD LEVEL ESG COMMITTEE 7% REDUCTION IN SCOPE 1 AND SCOPE 2 OR IN PROGRESS SOYA REDUCTION AND REPLACEMENT 1 MILLION MEALS DONATED FURTHER AWARD WINS 52 weeks ended 25 March 2023 27
Slide 29: Delivering commercial competitive advantage
COM M ERCIAL U PDATE DELIVERING COMMERCIAL COMPETITIVE ADVANTAGE Created through a clearly differentiated business model OU R GU I DI NG PRI NCI PLES OU R STR ATEG IC ENAB LERS QUALIT Y VALU E Delight the customer Vertical integration Lead on premium Utilisation Technical excellence Efficiency SU PP
Slide 30: Operating & Strategic Review
OPERATING & STRATEGIC REVIEW A DA M CO U C H CHIEF EXECUTIVE OFFICER 29
Slide 31: Our strategy and growth agenda
OPER ATI NG & STR ATEG IC R EVI EW OUR STRATEGY AND GROW TH AGENDA CONSOLIDATE EXPAND DIVERSIFY I NCR EAS E MAR KET S HAR E DRIVE TH E COR E I DENTI F Y N EW OPPORTU N ITI ES I N G ROW TH CATEGORI ES Self sufficiency in UK pigs continuing to increase Prepared poultry creates new opportunity for grow
Slide 32: Summary & outlook
OPER ATI NG & STR ATEG IC R EVI EW SUMMARY & OUTLOOK ESTABLISHED TRACK RECORD CONSISTENT AND PROVEN STRATEGY POSITIVE OUTLOOK High quality sustainable growth achieved across Expansion of Poultry vertical continues Long term prospects remain strong all categories Step change in momentum at Pet Produc
Slide 33: Appendix 1: company history
APPEN DICES APPENDIX 1 1975 1988 1991 1992 1992 1995 1999 2001 2004 2005 Established Move into Preston George Bucktons FT Sutton’s Simply Sausages – Pethick & Co – Continental Jack Scaife’s – Perkins Chilled Agri-Food food production abattoir Pet food Deli Cooked Gourmet Sausage Cooked meats Fine Fo
Slide 34: Appendix 2: our locations
APPEN DICES APPENDIX 2 Our locations Ballymena We have sites across the UK and our primary processing facilities are well placed within key farming areas. Malton Sherburn-in-Elmet • Over 13,700 employees Hull Bury • Operating in 22 facilities Barnsley • Over £430m capital investment in the last 5 ye
Slide 35: Appendix 3: adjusted and reported earnings, tax and EPS
APPEN DICES APPENDIX 3 Adjusted & reported earnings, tax & earnings per share Adjusted & reported earnings (£m) FY23 FY22 Tax (%) FY23 FY22 Adjusted operating profit 146.5 140.6 Headline tax rate 19.0 19.0 Net IAS 41 movement 7.6 (2.8) Disallowed expenses 0.6 1.1 Impairment of acquired intangible as
Slide 36: Appendix 4: balance sheet and cash flow
APPEN DICES APPENDIX 4 Balance sheet and cash flow Balance sheet (£m) FY23 FY22 Cash flow (£m) FY23 FY22 Property, plant and equipment 464.1 434.8 Cash generated from operations 173.4 169.8 Intangible assets 223.2 231.3 Tax paid (20.4) (9.8) Rights-of-use assets 76.3 65.5 Net cash from operating act