Cranswick Plc · LSE:CWK
Cranswick — H1 FY2024 Earnings Presentation
31 slides from Cranswick's earnings presentation, November 2023
Slide 1: Cranswick Interim Results
CRANSWICK INTER RESULTS - ™ ~
Slide 2: Agenda
AGENDA INTRODUCTION & H1 FY24 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 statem
Slide 3: H1 FY24 Highlights
Slide 4: H1 FY24 Highlights: Our Long-Term Trading Record
H1 FY24 HIGHLIGHTS OUR LONG-TERM TRADING RECORD ADJUSTED PROFIT BEFORE TAX’ (£M) DIVIDEND PER SHARE (PENCE) nbroken dividend growth 1401 ez,009m MES ? ny — Revenue 33 years of u 578 108 as oe 78 Ea 6 5: iii ll | “90 ‘91 ‘92 "93 ‘94 “95 ‘96 "97 '98 ‘99 ‘OO ‘01 ‘02 ‘03 ‘Og ‘OS ‘06 'O7 ‘OB ‘09 "IO ‘NI
Slide 5: H1 FY24 Highlights: Financial Performance
REVENUE GROWTH +#12.3% H1 FY24 HIGHLIGHTS FINANCIAL PERFORMANCE ADJUSTED OPERATING PROFIT" ADJUSTED OPERATING MARGIN! ADJUSTED EPS GROWTH! #25.0% 6.8% +13.8% Target: Mid single digit FREE CASH FLOW? H1 FY24: £85.5m ROCE? Target: >6% LEVERAGE* Target: Mid single digit DIVIDEND PER SHARE (DPS) GROWTH
Slide 6: H1 FY24 Highlights: Commercial and Strategic Highlights
H1 FY24 HIGHLIGHTS COMMERCIAL AND STRATEGIC HIGHLIGHTS 10 YEAR CAGR Strong revenue growth of 12.3% reflecting effective inflation recovery and Compound ennual growth ye . ites t resilient volume growth across all four core UK food categories rates to 29 Mare ) A positive contribution from rapidly ex
Slide 7: Financial Review
Slide 8: Financial Highlights
FINANCIAL REVIEW FINANCIAL HIGHLIGHTS REVENUE (£M) +12.3% ADJUSTED PROFIT BEFORE TAX (£M)! +23.6% HI FY23 | 1,1163 | H1 FY23 | 660 | H1FY22_ 993.1 | HI FY22 | 683 | ADJUSTED EARNINGS PER SHARE (P)! +13.8% DIVIDEND PER SHARE (P) +10.2% HI FY23 | 986 | HI FY23 | 20.6 | HI FY22 | 103.5 | H1FY22 | 200 |
Slide 9: H1 FY24 Summary
FINANCIAL REVIEW H1 FY24 SUMMARY Revenue 1,253.7 1,116.3 +12.3% Like-for-like revenue growth! +12.0% Adjusted gross margin? 14.1% 13.1% +103bps Adjusted operating profit?> 85.5 68.4 +25.0% Adjusted operating margin?> 6.8% 6.1% +69bps Adjusted profit before tax?? 81.6 66.0 +23.6% Effective tax rate 2
Slide 10: Strong Revenue Growth
FINANCIAL REVIEW STRONG REVENUE GROWTH REVENUE BRIDGE (£M) 322 (223) — 13.0 (3.8) 118.3 +12.3% 1,253.7 H1 FY23 Retail Food Service | Wholesale Exports. Pet Products H1 FY24 Revenue growth is driven by: Increased volumes in our core UK food categories Inflation recovery through retail models Prepared
Slide 11: Strengthening Margins
FINANCIAL REVIEW STRENGTHENING MARGINS ADJUSTED GROSS MARGIN!2 ADJUSTED EBITDA MARGIN!24 ADJUSTED OPERATING MARGIN!23 14.1% 9.8% 6.8% 9.A% 6.5% 9 13.1% 1 oy 9.2% 9% 6.1% H1FY23, H2FY23 H1FY24 H1FY23 H2 FY23, H1FY24 H1 FY23, H2 FY23 H1FY24 Margin expansion continues Strong contribution from farming o
Slide 12: Net Debt
FINANCIAL REVIEW NET DEBT NET DEBT (€M) (2.8) (22.1) 123.3 (22.9) (39.1) | (31.7) 68) (3.7) (31.7) March Adjusted" Biological Working Taxation Net Dividends Leases Other September 2023 Acquisition September 2023 EBITDA assets capital capex pre acquisition 2023 NET DEBT/EBITDA' Net debt excluding IFR
Slide 13: Strong Long-Term Cash Generation
CASH INFLOW / q FREE CASH FLOW NET CAPEX ACQUISITION DIVIDEND PAID (OUTFLOW)? FINANCIAL REVIEW STRONG LONG-TERM CASH GENERATION BANKING FACILITY H1FY24 78.3 31.7 31.7 (24.2) FY23 149.2 83.9 (0.1) 36.3 29.1 FY22 158.4 92.4 38.5 32.8 (5.3) FY21 180.9 71.1 10.7 279 71.2 FY20 115.8 971 76.2 22.6 (80.1)
Slide 14: Strategic Investment Continues
FINANCIAL REVIEW STRATEGIC INVESTMENT CONTINUES £62m multi-phased expansion of Hull Fresh Pork facility £23m investment in new Worsley houmous facility £9m investment to double the ‘slow cook’ capacity at Hull Cooked Meats £11m Cooked Meats capacity and efficiency enhancements > CONSOLIDATE EXPAND {
Slide 15: Commercial Update
Slide 16: Customer Sales Resilient in Our Core Categories
COMMERCIAL UPDATE CUSTOMER SALES RESILIENT IN OUR CORE CATEGORIES FRESH AND CHILLED RETAIL SALES KEY CATEGORY SALES PERFORMANCE M2aw/o0sOcti9 M24w/ocsOct20 M2aw/eosOctz Mi zaw/oo2Oct22 M24 w/oo1 Oct 25 k Fresh Breaded Ready-to-Eat Poultry Chicken 14.6% 13.7% 10.9% 16.0% - Allretailers delivering sal
Slide 17: Feed Prices Falling Although Pig Prices Remain High
COMMERCIAL UPDATE FEED PRICES FALLING ALTHOUGH PIG PRICES REMAIN HIGH FEED INPUT PRICES 2019-2023 Feed costs remain high but falling away from the peak Pig price stabilising, albeit at record levels 300, 2 as0 LA + Gap between EU and British pork beginning to grow S200 150 - Retail prices continue t
Slide 18: Strong Category Sales
COMMERCIAL UPDATE STRONG CATEGORY SALES UK FOOD SALES H1 FY24 CRANSWICK CHANNEL SALES H1 FY24 Change Category Value Volume KB Fresh Pork’ 424.7% +5.8% Convenience? 413.9% 41.2% ann Gourmet Products® +17.9% +4.4% CF Poultry‘ +9.5% +0,8% Total core UK food 416.1% 42.7% UK Retail +14% Manufacturing +18
Slide 19: Commercial Growth Agenda and Outlook
COMMERCIAL UPDATE COMMERCIAL GROWTH AGENDA AND OUTLOOK CONSOLIDATE EXPAND DIVERSIFY VITALIN - Investment in pig supply chain and pork operations - Retail business wins in Cooked Bacon and Sausage » ‘Slow cook’ investment and new business - Investment and new business in ready-to-eat and Prepared Pou
Slide 20: Delivering Commercial Competitive Advantage
COMMERCIAL UPDATE DELIVERING COMMERCIAL COMPETITIVE ADVANTAGE Created through a clearly differentiated business model OUR GUIDING PRINCIPLES OUR STRATEGIC ENABLERS QUALITY Delight the customer Lead on premium Technical excellence SECOND NATURE MAKING MEAT SUSTAINABLE Pp INNOVATION Product Packaging
Slide 21: Operating & Strategic Review
Slide 22: Strategy and Growth Agenda
OPERATING & STRATEGIC REVIEW STRATEGY AND GROWTH AGENDA CONSOLIDATE DRIVE THE CORE EXPAND INCREASE MARKET SHARE IN GROWTH CATEGORIES IDENTIFY NEW OPPORTUNITIES atHome - Volume growth in pig meat categories + Investment in automation enhancing returns across the business + Self-sufficiency in UK pigs
Slide 23: Further Investment in Farming Infrastructure
OPERATING & STRATEGIC REVIEW FURTHER INVESTMENT IN FARMING INFRASTRUCTURE Acquisition of Elsham Linc doubles the size of our Red Tractor assured indoor pig herd Elsham Linc also provides a third feed mill with substantial capacity for growth Long-term lease of fully integrated pig and arable farming
Slide 24: Summary & Outlook
OPERATING & STRATEGIC REVIEW SUMMARY & OUTLOOK STRONG PERFORMANCE ONGOING INVESTMENT POSITIVE OUTLOOK » Strong revenue growth + £62m investment in Hull Fresh Pork site + Growth strategy on track - Strengthening margins - £23m houmous facility fit out . Demand for core pork and poultry categories rem
Slide 25: Creating great tasting, affordable food; authentically made and sustainably produced
Creating great tasting, affordable food; authentically made and sustainably produced OUR GUIDING PRINCIPLES APPENDICES au Delight Leader Pr Pre Technical excellence, INNOVATION Packaging “ ™~ 7 ALITY VALUE the customer Vertical integration 1 premium Utilisation Efficiency OSESONE ~~ a NATURE NU MAKI
Slide 26: A sustainable capital allocation framework
APPENDICES APPENDIX 2 A sustainable capital allocation framework INVESTING IN THE BUSINESS TO CAPEX OF C.£100M TO ADD CAPACITY, SUPPORT OUR GROWTH STRATEGY CAPABILITY AND AUTOMATION MAINTAIN INVESTMENT TARGET LEVERAGE OF GRADE BALANCE SHEET <2X NET DEBT:EBITDA' MAINTAIN PROGRESSIVE 2 DIVIDEND POLICY
Slide 27: ESG rating movements
APPENDICES APPENDIX 3 ESG rating movements RATINGS AGENCY CURRENT RATING LAST GRADED PREVIOUS ASSESSMENT MOVEMENT Better Food Index 1/30 suppliers assessed May 23 3/30 suppliers assessed A CDP Climate A- Dec 22 Climate B A Water B Water B Forests C, C, B-,C Forests C, C,C, C S&P 38/100 (85th percent
Slide 28: Company history timeline
APPENDICES APPENDIX 4 2S dw @ a & 1975 1988 1991 Established Move into Preston Agri-Food food production abattoir business (animal feed) Y ~w© FF 1992 1992 1995 1999 George Bucktons FT Sutton’s Simply Sausages- — Pethick & Co- Pet food Deli Cooked = Gourmet Sausage Cooked meats Meals SF HW a WO 2001
Slide 29: Our locations
APPENDICES Ballymena Malton erburn-in-Elmet Hull Vets Worsley ay Milton Keynes Retford 9 Lincoln Denbigh London 9 APPENDIX 5 Our locations Watton 9 ui 9 We have sites across the UK and our primary processing facilities are well placed within key farming areas. - Over 14,200 employees - Operating in
Slide 30: Adjusted & reported earnings, tax & earnings per share
APPENDICES APPENDIX 6 Adjusted & reported earnings, tax & earnings per share ADJUSTED & REPORTED EARNINGS (£M) H1FY24 HI FY23 TAX (%) H1FY24. HI FY23 Adjusted operating profit 85.5 68.4 Headline tax rate 25.0 19.0 Net IAS 41 movement 77 1.2 Disallowed expenses 0.9 0.6 Impairment of acquired intangib
Slide 31: Balance sheet and cash flow
APPENDICES APPENDIX 7 Balance sheet and cash flow BALANCE SHEET (£M) H1FY24 HI FY23 STATUTORY CASH FLOW (£M) H1FY24 HI FY23 Property, plant and equipment 496.7 444.0 Cash generated from operations 103.2 59.3 Intangible assets 224.1 225.8 Tax paid (22.9) (11.0) Right-of-use assets 85.0 719 Net cash f