UPDATE 2-Higher pork demand boosts Cranswick's full-year profit
* Full-year adjusted pretax profit up 6 pct at 52.2 mln stg
* Revenue rises 14 pct at 994.9 mln stg
* Operating margins fall to 5.4 pct from 5.7 pct last year (Adds comments from CEO, analyst; updates share movement)
By Aastha Agnihotri
May 19 (Reuters) - British pork and pies producer Cranswick Plc reported a better-than-expected full-year pretax profit driven by increased consumer appetite for locally produced pork.
The horsemeat scandal last year encouraged consumers to buy UK-reared pork, pushing up demand for Cranswick's products such as sausage, bacon and sandwiches.
The company's adjusted pretax profit jumped to 52.2 million pounds ($87.9 million) in the year ended March 31 from 49.1 million pounds a year earlier.
Revenue rose about 14 percent to 994.9 million pounds.
Analysts on average expected Cranswick to report a full-year pretax profit of 50.95 million pounds, on revenue of 986.72 million pounds, according to Thomson Reuters I/B/E/S.
Cranswick, which is involved in breeding and rearing of pigs, suffered higher input costs in the first-half to the end of third-quarter, hurting its overall operating profit margins that fell to 5.4 percent from 5.7 percent a year earlier.
"Margins were under pressure but we had great sales growth which we expect to continue next year," Chief Executive Adam Couch told Reuters.
Cranswick, which sources 80 percent of pigs through farmers in the UK, said margins were also hurt by the start-up costs of a new pastry facility at Malton in North Yorkshire.
"Pig prices retreated in Q4 and have been more stable since (164p/kg currently) and the pastry facility is now through its startup phase. Hence, we expect a small margin recovery in FY15E," Investec analyst Nicola Mallard said in a note.
The sausage maker has invested 20 million pounds in its production facilities in the past one year, including Malton.
Cooked meat sales rose 16 percent helped by higher demand for premium ham products.
Cranswick, which supplies to Tesco Plc, Morrisons and Marks and Spencer Group, expects to maintain its strong performance by catering to a growing sandwich market and increased demand for readymade food.
The company also plans to invest more in its sandwich facilities in the next 12 months as part of its "food-on-the-go" proposition, Couch said.
Cranswick, which generates about 90 percent of its sales domestically, is also trying to improve prospects abroad by opening new facilities in Southeast Asia.
"Export credentials are becoming very important for us. Today we export about a third of our volumes to countries outside UK," the CEO added.
Cranswick raised its final dividend by 6.8 percent to 22 pence per share.
Shares in the Hull-based company were up 0.17 percent at 1,213.63 pence at 0917 GMT on the London Stock Exchange. The benchmark index was down 0.68 percent. ($1 = 0.5942 British Pounds) (Reporting by Aastha Agnihotri in Bangalore; Editing by Gopakumar Warrier)