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Trading statements

Carr's trades in line with expectations

19 July 2016 07:32

Carr's (CARR) reported overall trading continues to be in line with the board's expectations for the financial year ending 3 September 2016.

AGRICULTURE

Feedblocks performed very well year to date, driven primarily by excellent volume growth in the US resulting from continued market growth and market share gains.

Feedblock sales volumes in the UK were slightly down in the year to date, due to the ongoing and widely-reported challenges in the UK agriculture market.

Feed sales were down less than 1% year to date. However the business gained market share as national feed sales declined by c.4.4% over the same period.

On 1 June 2016, Carrs Billington Agriculture (Sales) acquired 100% of the share capital of Phoenix Feeds.

The Lancashire-based business is a leading provider of dairy feed and technical nutrition advice to farmers in the North West of England.

Phoenix Feeds has an excellent fit with Carrs Billington, and the acquisition is in line with the stated strategy of strengthening the company's presence in the current geography and leading in dairy nutrition.

Machinery sales are down year to date, as are national machinery sales driven by a reduction in farm incomes and a lack of confidence in the short term prospects for farming.

There is no expectation that this will change in the near term and will likely continue through the next financial year.

The Country Store network performed well, with retail sales up on last year and exceeding management's expectations.

The improved performance can be attributed to the product offering and geographic reach of the Country Stores throughout South Scotland and Northern England.

The oil distribution business also performed well, with sales volume growth in the period.

FOOD

The Food division performed well, with underlying volumes 1.6%1 ahead of last year.

While there has been significant volatility in the wheat market in the period, Carr's approach to risk management, which seeks to match sales contracts with raw materials commitments, serves to minimise the impact of that volatility.

The insurance claim relating to the previously announced December 2015 flooding is ongoing, but there is no change to the expectation that this will be successful and the flooding therefore having little to no financial impact on the business.

ENGINEERING

The UK manufacturing business continued to feel the impact from the downturn in the oil and gas sector, but is benefitting from the ongoing resurgence in the UK nuclear sector.

As previously reported a number of the nuclear contracts in this financial year were weighted to Q3 and Q4, and some customer-triggered short-term delays resulted in reduced activity of the business in the period.

Carr's UK manufacturing business has been awarded The Sellafield Vessels and Tanks Category Management Framework contract, won through an open European Tendering process and valued at £48m at time of tender.

The framework agreement secures an exclusive position to deliver the design and manufacture of Sellafield's highest complexity vessels for the next ten years.

This is a significant milestone for the Engineering division, is the largest ever contract secured by the business and underpins the growth and development of our Engineering division over the medium term.

The Remote Handling business is to deliver its second robot, Sally, to Sellafield by the year end, with assembly underway.

This is the second in the series and was designed to assist in the removal of high-level toxic nuclear waste on the site.

As stated at the interim results in April, a product development programme is underway, to ensure that our remote handling technology remains at the forefront of the sector.

It is currently anticipated that the performance of the Engineering division will be behind the board's expectations for the 2016 financial year, due to the aforementioned contract delays.

However, the overall impact of this will be offset with results above expectations elsewhere in the Group and the longer term prospects for the division have been notably strengthened with the new Sellafield contract award.

DIVIDEND

The board announces that a second interim dividend of 0.95p per share (2015: 0.925p per share), an increase of 2.7%, will be paid on 7 October 2016 to shareholders on the register on 16 September 2016.

The ex-dividend date will be 15 September 2016.

Chief executive Tim Davies said: "The Group continues to operate in difficult and challenging markets and this has inevitably been exacerbated by the uncertainty triggered by the result of the recent EU referendum.

"However, the board remains confident that it is well-placed to respond to these challenges, and to take advantage of any opportunities that may arise from the changing markets.

"Carr's continues to benefit from the broad diversity of its product offering and geographic spread with a significant proportion of profits generated outside of the UK.

"The group is focused on generating organic growth, reviewing acquisition opportunities and driving innovation through research and development.

"The board remains confident of meeting its full year financial expectations."

The group expects to issue preliminary results for the year ending 3 September 2016 on 14 November 2016.

Story provided by StockMarketWire.com

Related Company: CARR

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