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Agriculture boosts Carr's Milling

RESULTS: Adverse weather has boosted demand for Carr's feed, fuel and animal health products - resulting in an impressive earnings boost
November 11, 2013

Agriculture was the driving force behind a stellar performance at Carr's Milling Industries (CRM) as adverse weather boosted sales of feed, feed blocks, fuel and animal health products.

IC TIP: Hold at 1700p

This helped agricultural sales to rise 16 per cent to £340m and pushed the division's pre-tax profit up 8 per cent to £8.8m. But, even without the weather boost, Carr's still delivered underlying growth and market share gains after further acquisitions and a 9 per cent jump in sales of its low moisture feed blocks. A feed block manufacturing facility is due to be built in New Zealand in 2014, where the product is already selling well.

Food sales rose 17 per cent to £94.2m, too, and profit here grew 26.5 per cent to £0.6m - production at the new Kirkcaldy flour mill also began in September which should mean result in better returns. Sales in the engineering division, meanwhile, rose 12.4 per cent to £33.4m, but a £0.5m one-off settlement cost meant profit there dipped 10.6 per cent. Relocation costs in Germany and fewer nuclear contracts at the UK businesses are expected to result in lower profitability this year as well, but Carr's should benefit in the longer-term as the UK rebuilds its nuclear energy capacity.

Broker Investec Securities expects pre-tax profit of £16.5m in 2014, giving EPS of 129.9p (124.6p in 2012).

CARR'S MILLING INDUSTRIES (CRM)
ORD PRICE:1,700pMARKET VALUE:£151m
TOUCH:1,675-1,700p12-MONTH HIGH:1,785pLOW: 917p
DIVIDEND YIELD:1.9%PE RATIO:13
NET ASSET VALUE:780pNET DEBT:28%

Year to 31 AugTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20093507.0050.423.0
20102987.4051.924.0
201137310.077.026.0
201240413.198.229.0
201346815.912932.0
% change+16+21+31+10

Ex-div: 18 Dec

Payment: 17 Jan