12 July 2012
CONTINUING STRONG PERFORMANCE
Carr's (CRM.L), the agriculture, food and engineering group, announces its second Interim Management Statement for the 52 weeks to 1 September 2012, as required by the UK Listing Authority's Disclosure and Transparency Rules.
The statement relates to the 18 week period ended 7 July 2012.
The financial performance for the period was ahead of last year, with results for the year to date also being ahead of budget. Taking into account the normally lower seasonal trading level for the final quarter, the Board is confident that strong earnings growth will be achieved for the full year.
In the UK, sales and margin growth in retail and machinery reflects the gains from the increased range of products. The unusually colder weather during April and May also had a beneficial impact on demand for feeds and fuel.
The feed block business continues to perform as expected. Strong growth in sales of low moisture products was achieved in the USA, particularly in the northern states due to the recovery in herd numbers. In the southern states, where the continuing drought caused a reduction in herd numbers, performance benefited from supply agreements with our joint venture partner in Shelbyville, Tennessee. The performance in both the UK and Europe of Crystalyx, low-moisture feed blocks, continued as expected. A positive contribution was also made by Scotmin Nutrition following the re-launch of high moisture products Megalix and the new brand Megastart.
Full production at Watertown, New York State, of AminoMax, the patented rumen bypass protein, is now underway with early engineering issues resolved. The high quality of the product has been well received by US dairy farmers and the plant is on track to achieving profitable sales next year.
The performance of our flour milling business has continued to be depressed by the long-term capacity issues experienced by the industry. In addition, the wheat price has remained highly volatile with dry weather in the USA and sub-optimal conditions in Eastern Europe and the former Soviet Union resulting in a 15 per cent increase in wheat costs since March.
The utilisation of the wheat handling facility at the Port of Kirkcaldy, adjacent to our mill, has far exceeded our expectations and, in addition to giving significant flexibility, has enabled Carr's to secure supplies of high quality wheat at competitive prices in the challenging grain market.
The Board has reviewed a range of options for improving the financial performance of the flour milling business, taking into account the needs of today's bakers and food manufacturers. As a result, the Board has approved the construction of a state-of-the art flour mill adjacent to the Port of Kirkcaldy for a total investment of £17 million. The new flour mill will be at the forefront of mill design, innovation and technology, with commissioning expected in September 2013.
Engineering has delivered a very strong financial performance as a result of the completion of a number of projects during the period and the order book reflects increasing demand across all activities.
Wälischmiller, the remote handling technology and robotics business, completed major contracts in Russia, France and China during the period. Outside the nuclear market the rigorous testing of a robotic system, Telbot, for cleaning tanks for Shell in Norway has been successful.
Specialist fabricators, Bendalls, is on track to complete a major vessel for the Evaporator D project at Sellafield by early September, despite late design changes, with revenue substantially being recognised in the current year. Work has also commenced on the multi-million pound contract to supply pressure vessels for a floating production storage and offloading platform, being manufactured by Hyundai in South Korea for BP with delivery early 2013.
Carrs MSM, based in Swindon, benefited from increased demand largely from Sellafield where it signed a "life of plant" contract, through to 2020, for the supply of critical parts.
On 25 May 2012 the Group completed the acquisition of Clive Walton Engineering Limited, based near Carlisle, for a total consideration of £800,000 payable in cash out of the Company's existing bank facilities. The business is expected to be earnings enhancing in year one and is engaged in machinery parts for various industrial sectors and complements Bendalls Engineering.
At 2 June, net debt was £9.0 million, up £13.6 million on net cash of £4.6 million at 3 September 2011.
This cash outflow arises from two main sources, higher working capital and fixed asset additions. Increases in inventory relate to agricultural machinery and retail products, both of which have generated significantly greater sales, and higher work in progress across the engineering businesses. Fixed asset additions include the spend on Phase 1 of the new factory for Wälischmiller Engineering in Markdorf, Germany.
A second interim dividend of 7.25 pence per share (2011: 6.5 pence per share) will be paid on 5 October 2012 to shareholders on the register on 14 September 2012. The ex-dividend date will be 12 September 2012.
|Carr's Group plc
Chris Holmes (Chief Executive Officer)
Ron Wood (Finance Director)
|Bankside Consultants Limited