Carr’s Group warns of profit drop as US drought hits demand
Agriculture and Engineering Group Carr’s has warned that profits may drop for the financial year ending 2 September 2023.
In a statement to the Stock Market this morning the company said trading has been “challenging” for the Speciality Agriculture division, blaming lower demand in the USA due to drought conditions and in the UK due to higher costs of all farm inputs.
The board expects adjusted profit before tax for the current financial year to be in the region of £8 million, down from the £10m expected profit figure it shared with the markets earlier this year.
Expectations for August 2023, historically a strong trading month, have now been moderated by delayed recovery in our markets. From 2024 onwards management anticipates long-term recovery for this division as drought in the USA continues to recede and herds are rebuilt.
The Engineering division has high activity levels and is trading in line with the prior financial year, delivering a strong second half of the year. The current order book provides confidence for the next 18 months.
In October 2022 Carr’s sold its 50% stake in Carr’s Billington Agriculture business by selling out to its partner, Edward Billington and Son for £44.5million.
The deal was intended to grow shareholder value in Carr’s, which found the group’s senior management and shared functions were “disproportionately consumed” by running the agriculture sales division.
However the deal incurred higher central costs in the course of concluding the transitional services agreement. That deal is now expected to complete before the end of calendar 2023, thereby “freeing up key resources to focus on priorities in the remaining business”.
Shares in Carr’s were suspended earlier this year over auditing issues in relation to delays in publishing its audited results for the year ended September 3, 2022. Grant Thornton said they were unable to rely on an earlier audit by Mitchell Charlesworth.
