Carr’s (CARR) has pushed up inventories by a quarter since its September year-end, a possible reflection of Brexit uncertainties, which meant that operating cash flows fell as a proportion of profits from the 2018 half-year, even though receivables fell as a proportion of revenues. On top of Brexit, another factor that the agri-business cannot control is the weather. The beginning of 2019 was much warmer than the same period in 2018, which meant improved grazing conditions for livestock and a resultant 14.1 per cent decline in UK feed block sales. Along with a 9.9 per cent decrease in Europe, that led to flat operating profits of £9.8m at the agriculture division. All told, the group registered a 2.4 per cent increase in gross profit, albeit on a 10 basis point reduction in the underlying margin.
The group continues to diversify and geographically expand its operations. The integration of livestock supplements manufacturer Animax is “progressing well”, with a focus on improving the group’s production process through increased automation. The aim is to expand its distribution network in the US and Europe. Carr’s has also won an $8.5m (£6.5m) contract in the US under its remote handling business, and was awarded “significant funding” from the US Department of Energy in December last year. During the reported period, investment in a new site in Tennessee helped boost US feed block sales by 5.6 per cent.
Analysts at Investec expect pre-tax profit of £17.4m during the year to August 2019, giving EPS of 13.9p, compared with £16.6m and 13.6p in FY2018.
CARR'S (CARR) | ||||
ORD PRICE: | 146p | MARKET VALUE: | £133m | |
TOUCH: | 146-150p | 12-MONTH HIGH: | 176p | LOW: 128p |
DIVIDEND YIELD: | 2.4% | PE RATIO: | 16 | |
NET ASSET VALUE: | 117p* | NET DEBT: | 19% |
Half-year to 2 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 200 | 10.6 | 9.0 | 1.08 |
2019 | 206 | 10.3 | 8.3 | 1.13 |
% change | +3 | -3 | -8 | +5 |
Ex-div: | 25 Apr | |||
Payment: | 31 May | |||
*Includes intangible assets of £30.9m, or 34p a share |