World price surges lift Cumbrian farm group

Nov 11 2008 by Peter McCusker, The Journal

A YEAR of soaring commodity prices has helped agriculture and engineering group Carrs Milling notch up record results as revenues rose 50% and profits doubled.

The Carlisle group saw profits tumble in its last annual figures, but its strong performance for the year to the end of last August sent its share price up more than 4% to 505p.

Carrs, with three divisions – agriculture, food and engineering – achieved a turnover rise of 47% to £372.3m, with pre-tax profits up 133% to £12.9m. Chairman Richard Inglewood said: “The excellent result for the 52 weeks to August 30, 2008, was driven by our largest division, agriculture.

“It reflects our continuing strategy of growing our core business in new areas by developing new brands and new markets, as well as the incidence of one-off favourable factors relating to the purchase of commodities at a time of substantially rising prices.

“We have well invested facilities that efficiently produce the cost-effective products we manufacture and sell.”

He said it had been an extraordinary year for commodity prices, with many key raw materials in the UK – feed and milling wheat, soya and rape meal – more than doubling as a result of demand from China and India for agricultural products, combined with low world commodity stocks.

He said: “Overall, the group remains well placed for the current year, albeit without the benefit of exceptional trading conditions in its largest division, agriculture.”

Carrs said £4.1m of the pre-tax profit was of an exceptional trading nature – a windfall gain of £2.9m occurring when the cost of raw materials was rising sharply. Its business was also helped by a sharp rise in farmers’ incomes after rises in grain and farm-gate milk prices.

In 2007 Carrs’ pre-tax profit fell 17.1% from £7.3m in 2006 to £6.1m.

Nicola Mallard, of Carrs’ house broker Investec, hailed “a very strong year”.

She said: “Carrs has reported an excellent year’s progress, with profits doubling. Some of it was windfall, but equally a fair degree of solid underlying improvement from volume and margin.

“ Excluding the windfall element, we expect further progress in the current year in all three divisions.”