Panmure says Cranswick can overcome rising costs

7th Apr 2014 14:25

Panmure Gordon & Co believes sausage maker Cranswick can survive rising pig prices, but it advised investors to hang onto their shares rather than buy more.Cranswick said on Monday that record input prices during the year to March 31st meant operating margins would be slightly below those achieved a year ago, but sales climbed 12% on strong demand for pork, bacon and cooked meats.Panmure said it was sticking to its forecast of a 4% rise in annual pre-tax profits to £51.3m.The broker said: "UK pig prices have been falling which should allow Cranswick to expand margins in the 2015 full year and we forecast 11% pre-tax profit growth to £56.9m."Panmure said Cranswick's competitive position in the UK had improved due to industry changes and its entry into gourmet pastry products had given it another niche market."We feel, though, that the current valuation reflects this and we maintain our 'hold' recommendation and 1330p target price," the broker said.Shares fell 4p to 1,273p at 14:32 in London.PW