Two FTSE 350 Stocks In Focus - Sainsbury Plc and Cranswick Plc

  • Sep 18, 2019 BST
  • Team Kalkine
Two FTSE 350 Stocks In Focus - Sainsbury Plc and Cranswick Plc
Sainsbury Plc

Sainsbury Plc is one of the largest supermarket chains in the United Kingdom. The company was once the largest retailer of groceries in the United Kingdom. Subsequently this position was taken over by rivals, whereby the company was pushed to the third place in terms of market share, Tesco and Asda holding the first and second place respectively.

The company’s business in divided into three main divisions; Sainsbury’s Supermarkets Ltd, Sainsbury’s Bank and Sainsbury’s Argos.

The largest shareholders of the company (as at 06 February 2018) is the Sovereign wealth fund of Qatar which holds 21.99 per cent of the company’s shares. The company was admitted to the London Stock Exchange on 11 July 1975, where its shares trade with the ticker name SBRY. The company’s shares are constituents of the FTSE 100 index.

News Update

The company on 10 September 2019, reported that Jim Brown has taken full responsibility as the Chief Executive Officer of Sainsbury's Bank. Jim had joined as CEO Designate on 19 June this year and has worked with former Chief Executive Peter Griffiths during the transition period till formal handover.

Jim Brown is a former banker with Royal Bank of Scotland PLC ('RBS') during 2015-2017, having held positions of responsibility.

Insights from Financial Results published on 1 May 2019
  • The Underlying profit before tax of the company for the financial year amounted to £635 million, which is up by 7.8 per cent, aided by excellent performance in food categories, because of Argos synergies delivering £160 million three quarters of the year before schedule and lower interest costs.
  • The company’s retail arm’s underlying operating profit have gone up by 10.7 per cent to £692 million. Sainsbury's Bank division underlying profits stood at £31 million, which is in concurrence with the guidance given.
  • The Statutory profit after tax of the company this year stood at £219 million which is down from £309 million Statutory profit after tax for the 2018-17 financial year. This was on account of non-underlying expenditure in relation to legislation on Sainsbury's Bank transition, Guaranteed Minimum Pensions, retail arm restructuring, Asda transaction and Argos integration.
  • The Net debt of the company reduced during the period by £222 million to stand at £1,636 million (including the perpetual shares). Net debt reduction of £162 million is prior to fair value derivatives adjustments and ahead of £100 million guidance previously given.
  • The company for the year registered a strong cash generation with retail arm’s free cash flow of £461 million, which is up by 6.7 per cent for the year. £220 million worth of cost savings was also delivered by the company during the year.
  • The company’s Underlying net finance costs for the year also reduced by 19.3 per cent to stand at £96 million.
  • The company for the year has proposed to pay a final dividend of 7.9 pence per share, whereby the full year dividend will increase to 11.0 pence per share, which is an increase of 7.8 per cent over previous year.

Source – Company’s Annual report published on 1May 2019

Stock performance at the London stock exchange over the past five days 

Price Chart as on 18 September 2019, before the market close (Source: Thomson Reuters)

On 18 September 2019, at the time of writing the report (before the market close, GMT 9.05 AM), SBRY shares were trading on the London Stock Exchange at GBX 214.2.

The stock has a 52-week High of GBX 327.25 and a 52-week low of GBX 177.05. The total market capitalization of the company was £4.74 billion.

Outlook

The company during the year successfully integrated Argos with itself, which was acquired in 2016, the development helped it achieve £160 million worth of synergy benefits ahead of schedule. The company also achieved a major transformation in the way it run Sainsbury's stores, achieving significant improvements in the process to store standards, which continue to remain a focus. Clients continue to rate the company on top for quality food and it is also expanding its premium range. The company continues to focus on reducing costs to make commodity products deliver better value to its customers.

The company plans to increase investment in its core business, by upgrading 400 supermarkets this year. £4.7 billion worth of company’s business is online; hence it is investing on upgradation in technology infrastructure. The company also plans to reduce its net debt by £600 million over the next three years.

The company is confident that it will be able to deliver on its strategy despite the challenges of operating in a highly competitive market where shopping habits continue to change.

Cranswick Plc

Cranswick Plc is a United Kingdom based producer and supplier of foods products. The company supplies its products in premium, fresh products and value-added food categories. The company have its own breeding and rearing operations for pigs and feed mill, and hatchery for chicken. The company through retail, food servicing and manufacturing channels provides gourmet sausages, hand-cured & air-dried bacon, cooked meats, cooked chicken products and charcuterie to its customers.

The company’s products are available under the brand names; Woodall's, Yorkshire Bake, Bodega and Simply Sausage.

The company’s shares are listed on the London Stock Exchange where they trade with the ticker name CWK. The shares of the company are part of the FTSE 250 index.

News Update

The company on 5 September 2019 came out with an update, that it has made an application to the United Kingdom Listing Authority and to the London Stock Exchange for the listing of 203,335 Ordinary Shares of 10 pence each to be admitted to the Official List of shares.

These shares will be issued to existing shareholders as a result of AGM elections results received pursuant to the scrip dividend offered in lieu of final dividend for the year ending 31 March 2019.

Insights from Financial Results published on 21 May 2019
  • The Revenue of the company for the year stood at £1.44 billion, similar to the previous year after adjustments for the 53rd week
  • The company’s adjusted profit before tax for the year stood at £92.0 million which, when compared on a like-for-like basis over last year, manifests a progress working within a difficult macro- economic environment.
  • The Adjusted earnings per share of the company for the year stood at 144.3 pence whereas it was 145.0 pence per share last year. On a comparative 52-week period, the adjusted EPS is 1.9 per cent higher.
  • The Board of the company proposed a final dividend of 40.0 pence per share this year whereas for previous year it was 38.6 pence, registering an increase of 3.6 per cent. Combining with interim dividend of 15.9 pence per share this makes the total dividend for the year of 55.9 pence per share, which is 4.1 per cent higher than the 53.7 pence per share dividend paid in the previous year.

Source – Company’s Annual report published on 21 May 2019

Stock performance at the London stock exchange over the past five days 

Price Chart as on 18 September 2019, before the market close (Source: Thomson Reuters)

On 18 September 2019, at the time of writing the report (before the market close, GMT 12.40 PM), CWK shares were trading on the London Stock Exchange at GBX 3034.0.

The stock has a 52-week High of GBX 3512.28 and a 52-week low of GBX 2340.00. The total market capitalization of the company was £1.58 billion.

Outlook

The company has witnessed strategic and commercial progress during the past year, whereby its base has strengthened, and it is well poised to deliver on its strategic plans.

On the long-term horizon, the company achieved progress despite occasional instances of intense business environmental factors. The forthcoming year is expected to be in line with the present year business conditions. This suggests that the company’s operating margin would most probably decline, indicating towards the difficult business environment the company is operating in, together with starting & commissioning expenditure connected with the new Eye Facility, only slightly mitigated by management actions.

Trading ever since has been in line with expectations and the Board's foresight for the company’s performance going into the next financial year remain as it is.

However, despite these near-term factors, the new Eye and the existing poultry facilities along with the company’s broadening client base, is providing a good platform to the company to further accelerate the company’s business and bring growth to the attractive and expanding protein category. For a long-term horizon, the company is well poised to continue its journey of successful growth and development.

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