City round-up: Carr’s Group; Real Good Food; Coral Products
Carr’s Group, the Cumbrian agricultural and engineering business, reported a 10.6% increase in interim sales, and static profits, today.
In the six months to February 26, the group achieved turnover of £222.7m, up from £201.4m, with a pre-tax profit of £9.5m. Net debt jumped by 182.8% to £29.9m. The interim dividend remains the same at 1.175p per share.
During the period, significant raw material cost inflation has affected all parts of the business, it said.
The engineering division successfully managed the impact of steel and component cost increases through existing contract arrangements.
Management is confident that pricing in all parts of the UK-based agricultural supplies division correctly reflects the rapidly changing raw material cost base, so far with limited impact on volumes.
In speciality agriculture changes to selling prices lagged cost increases in the early part of the year due to the time gap between orders received and delivery in a period of rapid cost movement, but costs and prices have since been brought into line and the situation has stabilised at higher levels.
Volume demand has been relatively strong in the first half. Second half volumes may be adversely impacted by higher prices and drought in some parts of the USA. Management will closely monitor UK volumes through the summer months when customers may decide to limit outgoings by more intensive use of grazing and pasture.
During the second half, an improved performance in engineering, where order books stand at record levels, together with continued positive trading in agricultural supplies, are expected to offset volume and pricing challenges in speciality agriculture. The board is confident in the prospects of all three divisions in the medium term and its full year expectations are unchanged.
Executive chairman, Peter Page, said: “Carr’s Group has performed well in the first half, with a strong performance in agricultural supplies at a time of extraordinary raw material cost increases and a marked recovery in engineering offsetting input cost impact on margins in speciality agriculture.
“The outlook for the second half remains positive with the group on track to meet the board’s expectations for the full year.”
::
Real Good Food
Liverpool-based food ingredients and cake decoration business, Real Good Food, said annual revenues, for the year to March 31, 2022, have increased nine per cent to £40.5m, but are still below pre-pandemic prior year levels.
In a trading update for the year, it said a adjusted EBITDA was just under £0.7m compared with £0.2m in 2021, equating to an expected, much reduced, loss before tax of £2.8m, against a pre-tax loss of £6.1m in 2021. Overall, this performance is below board expectations.
As previously reported, the group performed strongly in the first half, reporting revenue and EBITDA well ahead of prior year and back to pre-COVID levels.
But revenues during the third quarter – October-December 2021 – the group’s seasonally busiest period, were disappointing and well below expectations due to severe shortages and erratic deliveries of key ingredients and services, compounded by high absence rates because of the Omicron variant.
Inevitably, this affected the group’s ability to fulfil customer orders and the business continued to work closely with customers during this difficult period.
Trading in the fourth quarter and in the first weeks of the new financial year continued to be impacted by these shortages and absences, while significant input cost increases have also dragged profitability down.
The group will continue to focus its efforts on products that are profitable and pass these unprecedented cost increases – in sugar, palm oil, energy, packaging and transport – through to its customers, but there is a lag effect of a few months. Overall, revenue in H2 was seven per cent lower than the prior year. Adjusted EBITDA for the second half was marginally positive, compared with £800,000 in 2021.
Net debt as at March 31, 2022 was £25.3m (2021: £48.6m), a reduction of £23.3m during the year. The sale of Brighter Foods on May 11, 2021, for cash proceeds to the group of £35.6m, enabled £23.1m to be repaid to loan note holders and £8.5m to be paid into the pension scheme to fully fund it on an ongoing basis. Cash from operations showed a net inflow of £0.3m.
Given the challenging environment in terms of both cost and demand pressures, the board is focused on reducing complexity and waste, other cost saving projects and selective new product launches to make the business as competitive as possible. With a significant milestone due in 2023, relating to the repayment of borrowings, the group said it is focused on improving performance to meet these obligations.
Executive chairman, Mike Holt, said: “The last few months have been very difficult due to a number of issues relating to costs, supply chain and unavoidable staff absences leading to our performance for the financial year just ended being worse than we had hoped.
“The unprecedented cost increases being experienced by all businesses are being passed through to our customers but there is a timing lag which is impacting profitability. The group is determined to hunker down, control costs and protect revenues, and has the support of its loan holders and major shareholders to navigate this difficult time.”
::
Coral Products’ Haydock site has been sold
Coral Products, the Manchester-based plastics group, said its sales and reportable pre-tax profits for the year to April 30, 2022, will be “materially above market expectations”.
In a trading update today, it said this was due to the sale of land and building at Haydock.
The board intends to declare a second interim dividend of 0.4p per share and will decide on any proposed final dividend on completion of the audited results for the year.
Also, the business said its distributable reserves have increased by £500,000 arising from the release of the revaluation reserve following the sale of the land and building at Haydock.
