Carr's beats its expectations as FY profit and revenue rise
By Michele Maatouk
Date: Monday 12 Nov 2018
(Sharecast News) - Agriculture and engineering group Carr's reported a jump in full-year profit and revenue on Monday thanks to a strong performance in UK agriculture, with growth across all areas.
In the year to 1 September 2018, pre-tax profit rose 45.2% to £16.6m on revenue of £403.2m, up 16.5% on the previous year. Operating profit increased 44.4% to £17.5m and adjusted earnings per share came in at 13.9p, up 56.2% on 2017.
The performance was ahead of the board's expectations, with both the company's divisions benefitting from investments made in previous years, particularly the acquisition of NuVision, as well as a recovery in UK manufacturing business and improvements in underlying markets.
Carr's said UK Agriculture continued to perform strongly, reflecting improved farm incomes and higher levels of farmer confidence. In the USA, cattle prices improved steadily during the year supporting a recovery in USA feed block volumes, which were significantly ahead of the prior year.
Meanwhile, UK feed blocks performed in line with expectations while European feed block sales volumes through its joint venture business based in Germany, Crystalyx Products GmbH, continued to grow.
The engineering division delivered a "significantly improved" financial result compared to the prior year, with a strong recovery in the manufacturing business and a significant contract announced in July 2017 performing as expected.
Chairman Chris Holmes said: "Trading for the new financial year has started in line with the board's expectations. We made further progress during the year on our strategic objectives and continue to believe the breadth of our product offering, investments in acquisitions and research, and our international footprint leaves us well positioned for further growth across both our divisions in the medium term."
Carr's said it remains confident in the prospects of the UK agriculture business in the near term following the sustained recovery in farm incomes.
"While we now have greater visibility in relation to farming support post Brexit, we remain cautious over the nature of future trade agreements with the EU and the rest of the world. We expect the gradual recovery in USA cattle prices to continue in the current financial year, which, together with the acquisition of Animax and expansion into other geographic markets, provides a solid base for growth in the agriculture division."
At 1550 GMT, the shares were up 4.5% to 163p.
Shore Capital analyst Phil Carroll said: "We believe Carr's is in good position benefiting from the investment made in prior years and ongoing investment today.UK Agriculture looks to be in broadly a good place with the added visibility on farming support over Brexit being welcome news whilst the improved engineering backdrop provides a significant opportunity for the group."
He rates the stock at 'buy'.
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