Brexit has had a twofold impact on agriculture and engineering group Carr’s (CARR). Weak sterling has benefited customers selling into the EU because, as sales are translated back into sterling from euros, exchange rates have boosted profits, so customers can spend more on Carr's products. This was evidenced by an 8.7 per cent increase in manufactured feed volumes last year, and a 4.4 per cent improvement in like-for-like UK retail sales. Chief executive Tim Davies is unsure what tariff and trade rules will look like in the wake of a Brexit deal, but said financial support to the agriculture sector has been guaranteed until at least 2022.
Carr’s is defending against this uncertainty by expanding its international business. It bought US-based NuVision Engineering in August last year, and within the first year of ownership sales have improved from £0.2m to £5.7m. Carr’s also purchased Animax after the period end, a producer of trace element supplements, for total a cash payment of up to £8.5m. Management believes the deal will complement its existing global feed blocks business, where global sales volumes increased 15 per cent last year. Despite being based in Suffolk, Mr Davies said there’s opportunity to distribute Animax’s products internationally.
Analysts at Investec expect pre-tax profits of £17.4m during the year to August 2019, giving EPS of 13.5p, compared with £16.6m and 13.6p in FY2018.
| CARR'S GROUP (CARR) | ||||
| ORD PRICE: | 158p | MARKET VALUE: | £144m | |
| TOUCH: | 157-165p | 12-MONTH HIGH: | 167p | LOW: 118p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 115p* | NET DEBT: | 13% | |
| Year to 1 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014 | 429 | 16.6 | 12.8 | 3.4 |
| 2015 | 331 | 13.7 | 10.0 | 3.7 |
| 2016 | 315 | 14.1 | 10.7 | 3.8 |
| 2017 | 346 | 10.0 | 7.7 | 4.0 |
| 2018 | 403 | 15.5 | 13.0 | 4.5 |
| % change | +16 | +55 | +69 | +13 |
| Ex-div: | 29 Nov | |||
| Payment: | 11 Jan | |||
| *Includes intangible assets of £26.5m, or 29p a share | ||||
