Farming supplier Carr’s Group milks profit jump and raises dividend
Agricultural and engineering firm Carr’s saw a five per cent spike in share prices this morning after it reported a huge increase in profits and a boost in revenue in its full-year results today.
The figures
Carr’s revenue rose 16.5 per cent year-on-year to £403.2m.
Profit before tax soared 45.2 per cent to £16.6m compared to the full-year for 2017.
Net debt rose 8.6 per cent to £15.4m.
Carr’s lifted its dividend per share by 12.5 per cent to 4.5p, while earnings per share grew 56.2 per cent to 13.9p.
Why it’s interesting
The results are significantly improved from last year and well ahead of the board’s expectations, offering an indication of confidence in the agriculture and engineering industries ahead of Brexit.
Carr’s said the strong performance in UK agriculture reflects higher farm incomes and increased farm confidence. The company’s US feed blocks business was a driving force behind the results, with sales volumes up 17.7 per cent as US cattle prices recover.
In September Carr’s bought Suffolk-based company Animax for £6m, with a further £2.5m payable until 2020. It said the acquisition broadens the firm’s range of animal health and supplement products designed to support farmers.
In the engineering division, Carr’s has recovered from last year's setback, which it said was largely the result of one major contract delay.
UK manufacturing saw a strong recovery, despite confidence in the sector falling to a 16-month low last month.
However, Carr’s pointed to uncertainty over trade agreements after Brexit as an ongoing concern, with the UK's departure from the EU potentially affecting its engineering division supply chain. However, the company believes its geographically diverse operations can help take the strain of any difficulties.
As a result of the improved results the company raised its share dividend, prompting a 4.5 per cent rise in share price to 163p this morning.
What Carr’s said
Carr’s chairman Chris Holmes said: “We are very pleased to announce a significant improvement in the group’s financial performance for the year, exceeding the board’s expectations, across both the agriculture and engineering divisions. This performance was largely as a result of investments we made across the business in recent years, in addition to a recovery in our underlying markets.
“UK agriculture continued to perform well reflecting the sustained recovery in farm incomes. Our USA feed blocks business continued to benefit from the recovery in USA cattle prices and we made further progress on growing our international feed blocks business. Our engineering division also delivered a significantly improved performance during the year.
He added: “Trading for the new financial year has started in line with the board’s expectations. We made further progress during the year on our strategic objectives and continue to believe the breadth of our product offering, investments in acquisitions and research, and our international footprint leaves us well positioned for further growth across both our divisions in the medium term.”