Interim Management Statement
14 July 2011
Carr's Milling Industries PLC ("Carr's") (CRM.L), the fully-listed agriculture, food and engineering group, is publishing its Interim Management Statement, for the 19 weeks to date since the Group's 26 February 2011 half-year end.
Since the Interim Announcement of 11 April 2011, Carr's has continued to trade well resulting in a strong financial performance for the third quarter, in line with the Board's expectations. Consequently, we anticipate that profitability for the full year will be well above last year's underlying result.
- Disposal of Carrs Fertilisers for £19.0 million, plus the discharge of Carrs Fertilisers' net debt (expected to be approximately £5.9 million)
- Year to date trading is ahead of 2010
- Strong performance from Agriculture division, particularly animal feeds, fuel oils and retail
- Food division continuing to operate in an increasingly difficult market
- Engineering division performing strongly in the second half
- Strong balance sheet; cash surplus expected at year end
- Second interim dividend of 6.5 pence per share
The Group had a strong third quarter trading performance with animal feed and fuel oils benefiting from the colder spring weather in the north of the country.
All animal feed products, including compound and blended feed and low moisture feed blocks, experienced higher demand during the period. The expansion of Scotmin, the feed supplements business, into our existing UK distributor network is continuing and is proving successful.
Our new plant in upstate New York is on track to start production of Aminomax, the patented rumen bypass protein formulated to improve milk yields and profitability of dairy farmers, in September 2011.
Our fuel oil business continued to grow, benefiting from the gains in our total number of fuel customers, the expansion of our depots in 2010, and the cooler spring weather.
Demand for fertiliser was unusually high in the first half year resulting from high cereal prices and anticipation of higher fertiliser raw material prices causing early buying from a large number of farmers. Consequently, sales for the second half to date are lower, as expected.
The continuing over-capacity in the market persists and lower margins having an impact on profitability which we expect will continue into next year. We continue to focus on reducing costs and improving efficiencies to mitigate this situation.
Wälischmiller Engineering GmbH, based in south Germany, is engaged in manufacturing machinery for the nuclear industry in: Germany, China, France and Japan, and is enjoying a strong financial performance in the second half. The order book is strong through to late 2013.
In the UK, Bendalls is heavily engaged in two major contracts scheduled to be completed in late 2011. Smaller contracts have been successfully completed in this period. Revenue and profit at Carrs MSM is increasing, as expected, following the demand for additional manipulators and spares for de-commissioning.
On 28 April 2011 the Group completed the acquisition of Safe at Work Limited based in Carlisle for a total consideration of £1.7 million payable in cash out of the Company's existing bank facilities. The business is engaged in the supply of specialist protective clothing to the forestry and agricultural markets across the UK.
Following shareholder approval and the waiving by Carr's of the condition relating to the Finance (No 3) Bill 2010/2011, the disposal of Carrs Fertilisers to Origin Fertilisers (UK) Limited ("Origin") completed yesterday. The purchase price paid by Origin of £19.0 million is subject to customary adjustment for a normalised level of working capital and net debt at completion. Origin will also discharge the net debt of Carrs Fertilisers, which is expected to amount to approximately £5.9 million at completion.
At 28 May 2011, net debt was £29.8 million, up £11.3 million on £18.5 million a year earlier. This increase reflects higher working capital needs in line with higher raw material prices, particularly in our fertiliser business.
Following the receipt of the consideration from the Disposal the Board expects a cash surplus at the year end, 3 September 2011. At August 2010 net debt was £15.5 million with gearing at 70 per cent.
In line with its policy of paying three dividends per annum the Board has declared a second interim dividend of 6.5 pence per share (first dividend 6.5 pence per share), payable on 7 October 2011 to shareholders on the register on 16 September 2011.
|Carr's Milling Industries PLC
Christopher Holmes (Chief Executive Officer)
Ron Wood (Finance Director)
|Bankside Consultants Limited
|020 7367 8888|
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.