11th Apr 2016 08:27
LONDON (Alliance News) - Carr's Group PLC on Monday said pretax profit in the first half of its financial year slipped very slightly as its agriculture business in the UK suffered from low milk and livestock prices.
The agriculture, food and engineering company said it is on track to meet expectations for the full year financial year despite those challenges looking set to continue in 2016 and 2017.
Shares in Carr's Group were down 3.0% at 148.00 pence on Monday morning.
Pretax profit in the half-year ended February 27 fell to GBP10.5 million from GBP10.6 million in the corresponding period a year earlier, as revenue decreased to GBP189.1 million from GBP208.6 million.
Carr's said that while it achieved an "outstanding" performance from the US feed block business, agricultural market conditions in the UK continued to deteriorate.
Sales volumes of branded feed blocks in the US grew by 12% in the half, driven by favourable weather conditions, an ongoing increase in the size of the beef herds, and continuing investment in operations, Carr's said.
Feed block sales volumes in Europe, however, fell by 5.4% as a result of low farm gate milk prices, an issue which also hit the UK business. This, plus mild winter weather and low livestock prices meant sales volumes of feed blocks in the UK fell by 2.8%.
Meanwhile, in the food business, one of Carr's major customers was hit by the floods in Cumbria at the end of 2015, leading to a "consequential impact" on food sales volumes. However, Carr's said underlying sales volumes grew by 0.4% and that it doesn't anticipate any notable financial impact, thanks to having business interruption insurance cover.
The engineering division suffered a slow start to the year due to the phasing of contracts and following the refocus of the UK manufacturing business towards the nuclear sector. Operating profit declined by 58% in the first half, but Carr's said full-year expectations remain unchanged as it commences work on new contracts with orders booked through 2017.
Carr's will pay an interim dividend of 0.95 pence, up from the 0.925p paid the year before.
"The group is operating in challenging markets, however our international presence and diversity has provided a robust first-half performance. Trading in the second half is as anticipated and we remain on track to meet the full year expectations of the board," Chief Executive Tim Davies said in a statement.
"The UK agricultural market has suffered from the depressed farm gate milk and livestock prices and we expect this to continue through 2016 and 2017, which will directly adversely impact our UK farm customers," he added.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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