AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Summary
- Since lockdown restricted people from moving out of their houses to buy meals, it was estimated that more meals would be consumed at home per week than usual
- Though the foodservice sector dwindled and routes to retail were obstructed, food producers adapted resilient business strategies in order to maintain their sales
- The UK Food Producers- Premier Foods, Cranswick and Devro saw an increase in their sales with the lockdown
The food industry was inflicted by the Covid-19 havoc globally, resulting in the closure of businesses, slowing factory outputs and hampering supply chains. When the British government urged to control the spread of Covid-19 in March, the UK saw most of its foodservice related sectors like the restaurants, cafés, schools and hotels close their doors. Since lockdown restricted people from moving out of their houses to buy meals, it was estimated that more meals would be consumed at home per week than usual. The new consumer pattern is having diverse and far-reaching impacts on many food producers across the nation.
But the good news is that challenges were followed by opportunities. Though the foodservice sector dwindled and routes to retail were obstructed, producers adapted resilient business strategies in order to maintain their sales. Online websites played a crucial role in providing vital resources, connecting consumers with local UK suppliers, offering direct sales with contact-free delivery to the public and cutting out the supermarket middleman.
Let’s dive deep into the food industry and considering some top-performing LSE-listed stocks of the food producers, namely, Premier Foods PLC, Devro PLC, Cranswick PLC, and Hotel Chocolat Group PLC.
Premier Foods PLC
Premier Foods plc is a food company which was established in 2004, engaged in the manufacturing and distribution of branded and own label food and beverage products. The Company is divided into different segments including Grocery, Sweet Treats and International. The Grocery segment addresses the sales of savoury ambient food products, the Sweet Treats segment addresses the sales of sweet ambient food products, and the International segment is for reporting purposes.
Financial Highlights
In the quarterly trading update for the period ending 27 June 2020, the Group witnessed strong demand for its Grocery brands in Q1, resulting from consumers eating their meals at home. There was an increase in the Group sales of 22.5 per cent in Q1 2020 in comparison with the previous year, with branded sales up 27.0 per cent. The sales reflected the trends seen in the UK business, where total sales increased 23.0 per cent and branded sales were 27.9 per cent.
The sales reported by the Grocery segment was £162.1 million in Q1, and branded sales grew up 39.2 per cent in comparison with the prior year. UK households buying cooked recipes and meals during lockdown restrictions was the main factor contributing to the Group’s benefit. Sweet Treats segment witnessed an increase in sales by 0.7 per cent compared to Q1 2019, with branded sales up 0.5 per cent. Though the cake volumes went down in early Q1 2020, strong commercial plans resulted in a return to growth in the latter part of the period. A 13 per cent surge in the International sales was seen in Q1 2020 at constant currency. It was partly due to a softer comparative in 2019 as Brexit demand stocks unwound in Ireland. The Group has been active in investing in its online proposition and capabilities over the last couple of years. Because of this, the Group delivered growth of 115 per cent in Q1 2020, gaining 270 basis points of market share in this channel.
Stock Performance
Premier Foods PLC (LON:PFD) stocks were trading at GBX 88.90 on 18 September 2020 at 1:19 PM, up by 1.72 per cent from its previous close of GBX 87.40. The 52-week low/high price was reported to be GBX 18.46/93.80. It had a market capitalisation (Mcap) of £742.78 million. The company recorded a positive return on price, which was 129.70 per cent on YTD (Year to Date) basis.
Devro PLC
Based in the United Kingdom, Devro plc is a manufacturer of collagen products for the food industry. The Company conducts its operations in three regions- Americas, Asia-Pacific and Europe.
Financial Highlights
The Group’s sites continued to operate even in the challenging times of the Covid-19 pandemic, ensuring services to its customers and fulfilling role in the food supply chain. The performance of H1 2020 demonstrated the robust nature of the business. The Group generated strong growth in emerging markets by leveraging its product and service strengths through, structured approach, underpinned by its three-year commercial plans.
The half-yearly results for the six months ending June 2020 witnessed 1.4 per cent increase in edible collagen casings volumes with good underlying growth. The Group reported a decline of 0.2 per cent in the revenue. Though the edible collagen casings increased by 0.9 per cent, revenue from other products declined by 1.1 per cent. The underlying operating profit of £18.5 million was 4 per cent higher than the previous year (H1 2019: £17.8 million), and the underlying operating profit margin was up 60 basis points to 15.5 per cent (H1 2019: 14.9 pr cent). This was primarily due to the continued cost savings and lower depreciation. The underlying basic earnings per share increased to 7.5 pence (H1 2019: 7.0 pence). The Group recorded free cash flow of £7.2 million (H1 2019: £4.3 million), resulting from lower cash exceptional items and lower tax payments compared to the prior year. The covenant net debt reduced to £121.5 million and net debt to EBITDA stood at 1.9 times.
Stock Performance
Devro PLC (LON: DVO) stocks were trading at GBX 176.20 on 18 September 2020 at 2:04 PM, up by 0.11 per cent from its previous close of GBX 176.00. The 52-week low/high price was reported to be GBX 126.20/200.00. It had a market capitalisation (Mcap) of £293.83 million. The company recorded a positive return on price, which was 1.27 per cent on YTD (Year to Date) basis.
Cranswick PLC
Cranswick Plc is a supplier of food products, based in the United Kingdom. It is engaged in the manufacturing and supplying of food products to the grocery retailers of the United Kingdom, the food service sector and other food producers. The Company is indulged in providing a range of pork, gourmet sausages, cooked meats, cooked poultry, charcuterie, hand-cured and air-dried bacon and gourmet pastry products through retail, food servicing and manufacturing channels. Brands such as Bodega, Woodall's, Simply Sausages and Yorkshire Baker, comes under the Company.
Financial Highlights
The company made a strong start to the year, remaining cautious about the longer-term economic impact of Covid-19, and the uncertainty surrounding the ongoing Brexit negotiations. The Q1 2020 trading for the period ending 27 June 2020 has been strong. The revenue of the company was 24.8 per cent higher compared to the same period in the previous year. The revenue on a like-for-like basis was 19.2 per cent higher, excluding the contribution from acquisitions made in the prior year.
The cash position of the company was strong, with cash generation and tight working capital management, and net debt declining in Q1 2020. Retail volumes are expected to begin to normalise through the rest of the year, following the exceptional demand experienced in Q1 2020, as consumers gradually return to eating out of the home.
Stock Performance
Cranswick PLC (LON:CWK) stocks were trading at GBX 3,554.00 on 18 September 2020 at 2:27 PM, down by 0.45 per cent from its previous close of GBX 3,570.00. The 52-week low/high price was reported to be GBX 2,922.00/4,076.00. It had a market capitalisation (Mcap) of £1,875.56 million. The company recorded a positive return on price, which was 3.18 per cent on YTD (Year to Date) basis.
