Interim Management Statement

08 January 2013

Carr's (CRM.L), the agriculture, food and engineering group, announces its first Interim Management Statement for the 52 weeks to 31 August 2013, as required by the UK Listing Authority's Disclosure and Transparency Rules. 

The Statement relates to the 18 week period ended 5 January 2013 and is issued to coincide with Carr's Annual General Meeting being held in Carlisle at 11.30 am today.

The period has seen a positive financial performance, reflecting favourable trading conditions in agriculture and engineering.

Agriculture

This has been a strong trading period, particularly from our animal feed block businesses in the UK and USA and from our expanded agricultural branch network.

In the USA, the drought that persisted through most of 2012 resulted in poor forage and high demand for our low moisture feed block as a feeding supplement, with sales up 30 per cent on the corresponding period in the prior year.  Poor forage has also stimulated demand in the UK for both low and high moisture blocks and sales were also up on last year, benefiting from increased marketing and the recognised integrity of the products. Sales of Horslyx to the equine market had a particularly strong trading period.

Dairy feed sales recovered strongly from last year with lower than normal margins given the plight of the dairy farmer.

The retail branch network, increased by three outlets following the acquisition of Laycocks in July 2012, has continued to grow after last year's excellent result with a 32 per cent increase in sales during the period. This is substantially the result of the enlarged product range offered throughout the branch network. Machinery sales were low due to the adverse weather which has reduced yields from cereals and hence arable profitability. The reduction from machinery was partly mitigated by higher workshop activity and sales of parts.

Fuel sales volumes and profits were up on the corresponding period last year, reflecting the expanded distribution network following the Hexham depot opening in August 2011, which is establishing a strong presence in its territory, and the incremental benefit from the Cockermouth depot which opened in February 2012. 

Food

Against the backdrop of the lowest quality UK wheat harvest since records began, our three flour mills have performed relatively well. The drier winter followed by extreme wet months with low sunshine hours has produced low wheat yields with small grains, causing low extraction rates. The impact of this was that only a very low proportion of the home-grown bread wheat met the requirements of millers. The UK has consequently become much more dependent on imported wheat, notably from Germany. Through the investment at Kirkcaldy two years ago to reopen the port and Silloth's port location, Carr's Flour Mills is benefiting from this trend.

Both global and UK wheat prices have risen significantly during the last six months and remain exceptionally volatile due to many external factors. Our strategy is to cover raw materials in conjunction with the fixing of sales contracts, thus mitigating the risk of volatility on our margins. Sales volumes and margins are in line with annual expectations.

The building of the mill at Kirkcaldy is progressing well and is on target to be commissioned in September 2013.

Engineering

The strong trading performance in the second half of the year ended 1 September 2012 has continued with all three divisions busy and some major contracts having been completed.

Wälischmiller, the remote handling and robotics business in Germany continues to operate at full capacity.

Phase 1 (new office accommodation and some production capacity) of the new factory at Markdorf was completed and employees were relocated in October. Phase 2 (production capacity) has commenced and will be complete in May with the final phase scheduled to be complete in October 2013.

Carrs MSM, our master slave manipulator business supplying the nuclear and chemical industry, has enjoyed a successful trading period and in particular has benefited from higher volume of orders from Sellafield following the signing of the "life of plant" contract last year.

Bendalls, the specialist fabricators, is heavily engaged in a £4 million project to supply pressure vessels for a floating production, storage and offloading platform being built by Hyundai for BP. This contract is scheduled for delivery in March 2013. In December 2012, Bendalls was one of twenty five UK based companies invited by Areva to sign a memorandum of understanding for the supply of components and services for new EPR™ nuclear reactors planned for the UK. 

Financial Position

Net debt at 1 December 2012 was £16.5 million compared to net cash of £0.2 million a year ago and net debt of £2.5 million at 1 September 2012. The cash outflow since 1 September 2012 is the result of seasonal working capital increases in the agricultural businesses during the winter months, the rise in raw material costs, particularly wheat, and the further capital expenditure on the mill at Kirkcaldy and the factory at Markdorf, Germany.

The Group has total banking facilities of approximately £58.5 million.

Dividend

Subject to shareholder approval at today's AGM, the proposed final dividend of 14.5 pence per share will be paid on 18 January 2013 to shareholders on the register at close of business on 21 December 2012.

 

Enquiries:

Carr's Group plc
Chris Holmes (Chief Executive Officer)
Ron Wood (Finance Director)
01228-554 600
Bankside Consultants Limited
Simon Bloomfield
020-7367 8888

 

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