A big strength for Carr's Milling (CRM) is its geographic and operational diversity, which helps insulate the agriculture-to-engineering group from factors beyond its control - such as volatile weather. It was this characteristic that shone through during the group's first half.
Severe weather in the US, for instance, meant record sales of feed blocks there, while mild UK winter weather drove lower sales of fuel, heating oil, feed and feed blocks. Moreover, Carr's AminoMax product, which improves protein intake in cattle, is gaining traction among farmers on both sides of the Atlantic and capacity is being expanded, while a recently established distribution network in New Zealand is now yielding higher feed block sales in the country. Carr's also runs retail outlets in the UK and three new stores were opened. These factors resulted in higher profit at the agricultural division and the outlook is promising, too. Production is starting, for example, on special low-moisture feed blocks in the US and drought-hit farmers in the southern states are staring to restock.
The food business also experienced profit growth, thanks to a high quality UK wheat harvest and a new state-of-the-art flour mill at Kirkcaldy, commissioned in September - that's already delivering operational benefits. Despite the wet weather this winter, however, management expects a larger wheat harvest in 2014 as well.
The engineering division, meanwhile, saw the completion of a major nuclear contract and, in the second half, Carr's will complete a contract for handling radioactive materials for a Russian client. A contract with Shell and Statoil to develop telbot, a robotic device for gas tank inspections, is also progressing well. While Carr's MSM business, which makes remotely-operated robots for use in dangerous environments, saw strong sales growth, thanks to demand from a contract with Sellafield. However, reflecting the timing of contracts, growth was muted in the division and profit fell slightly. But the benefits of these contracts, along with significant investment, will be felt next year and Carr's is also well-positioned to benefit as the UK rebuilds its nuclear energy capacity.
Investec Securities expects full-year pre-tax profit of £16.5m, giving EPS of 128.9p (2013: £15.2m/119.9p).
| CARR'S MILLING (CRM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,728p | MARKET VALUE: | £154m | |
| TOUCH: | 1,706-1,750p | 12-MONTH HIGH: | 1,915p | LOW: 1,059p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 828p | NET DEBT: | 30% | |
| Half-year to 1 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 232 | 9.9 | 78.5 | 7.75 |
| 2014 | 215 | 10.1 | 77.5 | 8.5 |
| % change | -7 | +2 | -1 | +10 |
Ex-div:23 Apr Payment:16 May | ||||
