Carr’s Group exploring options for engineering arm following strategic review

Carr’s Group, the Carlisle-based agricultural and engineering business, is exploring options for its engineering division, it revealed in its interim results announcement today (April 18).

It follows a strategic review which concluded that continuing with two divisions (Agriculture and Engineering) is an inefficient operating model.

The board said it believes that both the Engineering Division and the Agriculture Division hold material value creation opportunities.

However, the Agriculture Division will be optimised in the medium term through transformation plans developed and implemented by recently appointed management, while the Engineering Division represents a near-term opportunity, it said.

Therefore, the group is running a process to explore options to maximise shareholder value with regard to the Engineering Division.

The engineering division, operating across seven sites in the UK, US and Europe, manufactures and services bespoke equipment, vessels, precision components and remote handling systems alongside providing specialist engineering services in the Nuclear, Defence, Oil & Gas, Motorsport, Pharmaceutical and Renewable industries.

Results for the six months to February 29, 2024, revealed group turnover of £81.4m, a two per cent improvement on the 2023 figures.

Pre-tax profits of £3.4m were compared with £5m the prior year. However, the group is doubling the interim dividend, from 1.175p per share to 2.35p per share.

The Engineering Division increased its six month revenues by 26.1% to £28.5m, and has a forward order book of £57.8m, up from £41.3m the previous year.

In Agriculture, revenues for the six month period reduced by 7.5% to £52.8m.

By the end of the half year period the group had net cash of £8.m, slightly down from £8.6m last year.

Group bank facilities of £25m were extended to December 2026.

The group said trading conditions in Agriculture remain challenging, particularly in the US, and the board expects this to continue through the current financial year, while retaining confidence in prospects improving in the medium to long term.

The short term focus is on ensuring that performance is optimised during persistently challenging conditions while making the changes necessary to deliver longer term value creation.

CEO, David White, said: “Having reviewed the position of the group and its market valuation the board has concluded that the value of each of our divisions individually, when added together, significantly outweighs our market capitalisation.

“The growing profitability and future prospects of our Engineering Division make this the optimal time to explore options to realise value for that division.

“The significant opportunities to improve our market position in our Agriculture Division point to short term focus on optimising trading through challenging conditions and preparing that business for future growth built on the foundation of our leading brands.

“We now have the team in place to deliver the transformation necessary at divisional and central level.”

At close of trading yesterday, Carr’s Group had a market capitalisation of £108.6m.

Chair, Tim Jones, said: “Our strategy of Focus, Improve, Deliver has highlighted the value opportunity that is available from each of our divisions in time.

“We have concluded that our Engineering Division represents a significant opportunity to deliver incremental value to shareholders now, and that it is the right thing to do to explore that opportunity.

“And we are excited by the opportunities in the Agriculture Division. Global demand for meat and dairy continues to grow strongly at the same time as the imperative to reduce the climate impact of livestock.”