DAVY VIEW

Cranswick’s Q3 FY 2019 performance highlights the continuation of headwinds experienced in Q2 – notably pig price deflation, reduced promotional activity and lower wholesale volumes. While the group’s expectations for FY 2019 remain unchanged, FY 2020 margins will be impacted by challenging trading conditions and higher start-up costs associated with the new poultry facility in Eye. The long-term supply agreement with Morrison’s is a positive development for the poultry business; however, the market’s focus will reside on the recalibration of margin. At first glance, we see c.10% downside to our FY 2020 PBT estimates.