Agricultural group feels impact of uncertainty and high interest rates
Carlisle-based agriciultural business, H&H Group, has reported better revenues for the year to June 30, 2024, but has seen pre-tax profits fall by almost two thirds.
Revenues of £19.498m were compared with £18.971m the previous year.
But pre-tax profits dropped from £1.412m to £502,000 after increased interest costs and a revaluation adjustment.
Operating profits also fell, from £1.880m to £1.328m.
The board has recommended a final dividend of 5p per share.
The group revealed an “outstanding performance” within its core agricultural business, Harrison & Hetherington, achieving a record-breaking gross turnover of £250m.
This figure represents the throughput of livestock. All monies from this income, with the exception of, commission, goes back to the farmer.
However, it was a more challenging year for the group’s estate agency and print and signage sectors which the board and management have now taken action and addressed.
H&H Group Chief Executive, Richard Rankin, says the latest results reflect the group’s underlying strength and success in serving the agricultural markets in some of the most difficult and turbulent conditions experienced by the UK economy in recent times.
He said: “I am disappointed with the result but not disappointed in the business or our teams – we have a fantastic rural business, and have now streamlined it, making it fit for the future.
“Announcing a dip in profits after two record years was never in the plan, but the continuing high levels of cost inflation and interest rates throughout this year makes the exceptional performance of our principal businesses even more remarkable.”
He added: “Harrison & Hetherington, our livestock trading business, has proved yet again that we are leading the way in the development of a world class service to clients across the country, and our H&H Land Agency and H&H Insurance teams are going from strength to strength in their support for farmers, landowners, and rural businesses through the minefields of change the whole agricultural industry is facing.
[AuthorRecommendedPosts]“Despite the national decline in livestock numbers, Harrison & Hetherington has had an exceptional year, achieving a record-breaking gross turnover in excess of £250m. The Farmstock team have risen to the challenge by increasing market share in particular with prime sheep, and we continue to strengthen our position as first choice for buyers and sellers of the highest quality stock.”
He said the Land Agency business, H&H Land & Estates, has continued to provide clients with vital consultancy support and advice on conservation and the environment in the face of continuing uncertainty surrounding the fundamental changes in government support and the reduction in pre-Brexit payments.
“A very poor winter and spring, combined with high interest rates, created major challenges in the land and farm sales market early in the year, with far fewer than expected coming to the market, thereby depressing this earnings and profit stream.”
He continued: “Reacting to very challenging conditions created by uncertainty and high interest rates, we have rationalised our regional network of high street offices, streamlined and expanded our online services, consolidating our Estate Agency, Lettings and Land & Estates Management teams into dedicated hubs that allow every member of every team to provide every client with the very highest level of personalised professional service.
“Firmly established as one of the UK’s leading professional rural insurance providers, H&H Insurance Brokers grows from strength to strength and its investments, wider geographical spread and an increased commercial insurance offering are paying dividends and feeding through into the financial results.
“In continuing to plan for growth, they have actively chosen to invest in their people and to recruit ahead of the plan for the year 24/25, which will take them to the next level in terms of profitability.
He revealed that customer price pressures, rising cost of materials and shrinking margins in a subdued and fiercely competitive market have created a substantial loss for H&H Reeds again this year.
“We have subsequently taken significant steps to rationalise that business into a profitable model, however, that aside we took the decision that this business no longer fits with our, predominantly, rural-focused strategy and have very recently concluded the sale of this business to its management team.
“The major investments made this year in the structure of the group are central to our strategy to make it ‘Fit for the Future’.
“In addition to the action taken on our two underperforming business streams, there are two areas where investment is being made in profitable parts of the group.
“A major upgrade of Borderway market is under way to further improve the facilities and enhance the experience for livestock, staff and customers. The property division consistently provides a stable income to underpin our results, and construction of a new Ford garage at Rosehill will add to this secure income stream.”
He concluded: “We have continued to invest in and develop our people across the group and we are proud of our reputation for developing young staff through apprenticeships, many of whom are rising to responsible positions within our operating companies.”