Carrs Group Regulatory News (CARR)

10 Jul 2008 07:00

Thursday 10 July 2008

CARR'S MILLING INDUSTRIES PLC - INTERIM MANAGEMENT STATEMENT

Profit guidance again raised

Carr's (CRM.L), the agriculture, food and engineering group, is publishing this second Interim Management Statement of the year to 30 August 2008, as required by the UK Listing Authority's Disclosure and Transparency Rules. The Statement relates to trading and events since the 1 March 2008 half year end. 

Background

The Interim Results for the 26 weeks to 1 March 2008, which were announced on 7 April 2008, were substantially ahead of the comparable period of the 26 weeks to 3 March 2007 and appreciably ahead of budget. 

On 27 May 2008, Carr's issued a positive trading update. This stated that, since 7 April 2008, Carr's had continued to enjoy strong trading, particularly in Agriculture, and now expected profit before tax for the year to 30 August 2008 to be in excess of £8.6m (2007: £5.5m). 

Overview

Since 27 May 2008, Carr's has continued to enjoy strong trading, particularly in Agriculture, much the largest of the Group's three activities. As a result, the Board's profit guidance is again being raised. The Board now expects profit before tax for the year to 30 August 2008 to be in excess of £9.2m (2007: £5.5m) on revenue of at least £330m (2007: £253m). These would represent increases of 67% and 30%, respectively.

Agriculture

Carr's has made further gains in market share in animal feed. Since 1 March 2008, compound and blended feed has increased its volumes and increased its revenues substantially (following increases in the cost of the principal raw materials, feed wheat and proteins). Volumes of low moisture feed blocks, in each of the UK, the USA and Germany, are also up on last year.

After an unusually busy first half (reflecting forward buying by farmers), fertiliser sales were also strong in the traditionally busy months of March and April. Continuing fertiliser raw material price inflation is resulting in increased sales, as many farmers are buying this year for next year's usage.

Retail equipment and machinery have traded strongly. On 7 July 2008, Carr's acquired a small groundcare equipment business, JM Raine, based at Spennymoor in Co. Durham.

Oil distribution has substantially increased its revenue and is making a useful contribution to Group profit. 

Food

The Group's Food business again substantially increased revenue on similar volumes following increases in the price of flour to compensate for the large increase in the cost of milling wheat. Whilst profit has increased, margins remain unsatisfactorily slim.

Engineering 

Since the half year end, Engineering, much the smallest of the Group's three activities, has enjoyed a steady level of activity. 

The level of enquiries remains high in the nuclear, petrol-chemical and oil and gas sectors. Order books are strong.

Indebtedness

A consequence of the substantial increases in the Group's revenue and working capital is a substantial increase in the level of net debt. At 31 May 2008, the end of the third quarter, net debt totalled £28.3m, which compares with £19.7m a year earlier. However, debt remains comfortably within committed facilities.

Enquiries:

This Interim Management Statement has been drawn up and presented for the purposes of complying with English law. Any liability arising out of or in connection with this Interim Management Statement will also be determined in accordance with English law.

This Interim Management Statement may contain 'forward-looking statements'. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Many of these risks and uncertainties relate to factors beyond the Group's control or which cannot be estimated precisely, such as future market conditions and the behaviour of the market participants. Actual outcomes and results may therefore differ materially from any outcomes or results expressed or implied by any such forward-looking statements.