Mild winter weather sees slow down in trade at agricultural business
Agriculture and engineering group Carr’s say trading has been affected by the unusually mild weather.
The board of the Carlisle firm said it expects the performance of the group to be in line with its existing expectations for the full year. The assessment came in a trading update.
As part of the update to the stock market Carrs announced that Chris Holmes will stand down as non-executive chairman.
Chris played an influential role in developing Carr’s from a UK business, generating revenues of around £70m on his arrival, to the international business it is today generating global revenues in excess of £400m.
Chris joined Carr’s Group in 1991 as managing director of the Agriculture business and became CEO of the group in 1994, a position he held until 2013 when he became chairman.
Tim Davies, Chief Executive Officer, said: “From a solely domestic UK company on Chris’s arrival, it is notable that close to half of the group’s total profits today come from its international operations.
“During Chris’s tenure he oversaw some of the toughest periods UK agriculture has witnessed, including the outbreak of foot and mouth disease in 2001 that caused devastation across British farming. It is testament to Chris’s leadership and vision that Carr’s emerged from this period of stress a stronger and fitter business.”
Trading in Agriculture during the last three months was behind the board’s expectations driven primarily by mild weather.
In engineering contract phasing has also led to a slow start but, with the benefit of a strong pipeline Carrs expect an improved performance for the remainder of the financial year.
As a result of this and lower central costs the firm expect the full year performance to be in line with expectations, albeit with a greater weighting than normal to the second half.
Agriculture markets have remained challenging. In the UK, lower cattle prices, downward pressure on milk prices and rising input costs have contributed to pressure on farm incomes which, combined with continuing Brexit uncertainty, has resulted in reduced levels of farmer confidence.
In addition, following the mild and dry weather seen over the prior year supporting large forage stocks on farms, the division has seen reduced spending on feed and animal supplements.
This has resulted in reduced sales volumes in both UK Agriculture and UK Supplements to the end of the period despite an initial good start to the financial year.
In the USA, reduced cattle prices and a delayed start to winter feeding has led to a lower level of demand for products.
Following a period of sustained drought most US states now have sufficient moisture to sustain grass growth, which is positive in the medium term for the US feed block business.
The Group’s financial position remains strong. Net debt as at 30 November 2019 was £29.7m compared to net debt of £23.8m at 31 August 2019. This was predominantly driven by seasonal working capital movements.
Tim Davies, Chief Executive, said: “Despite a challenging start to the year in our agriculture division, due to a number of weather and market factors, we are confident in the medium-term prospects for agriculture.
“These near-term challenges in agriculture are expected to be offset by a stronger than expected performance in our engineering business, where the order books remain strong, in addition to lower central costs. Our investments in people, acquisitions and research, alongside our expanding international footprint, leave us well positioned for sustained growth.”
The company expects to issue its interim results for the 26-week period ending 29 February 2020 on Wednesday 15 April 2020.