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Friday, 24 October 2014

Carr’s Milling looks to buy businesses as profits rise

Carr's Milling Industries, the Carlisle-based agriculture, food and engineering group, is hunting for more acquisitions.

The company this week reported a 30 per cent surge in profits, slightly ahead of analysts’ expectations.

It made £13.06 million before tax in the year to September 1, up from £10.01m the year before. Sales grew strongly from £373.32m to £404.06m.

In a statement to shareholders, chairman Lord Inglewood said: “The challenge for Carr’s, after the strong period of financial performance experienced, is how to build on it and grow further.

“We view 2013 with optimism, boosted by the likely benefits of the considerable investments we have made and are making across all three divisions.”

The company spent £2m on acquisitions over the year, notably Clive Walton Engineering at Cumrew near Brampton, the agricultural chemists Laycocks and animal-feed business Afgritech.

Chief executive Chris Holmes said: “We are still looking for new businesses to buy.”

He added: “The results are ahead of expectations. We finished the year very strongly in agriculture, especially in the United States, and also very strongly in the engineering side of the business.”

The food division, which includes Silloth flour mill, fared less well because of “long-term over-capacity in the flour industry”, Carr’s says.

Engineering, led by Bendalls of Carlisle, was boosted by strong demand from the nuclear industry in China, France, Germany, Japan, Russia, the UK and USA.

Likewise, agriculture experienced healthy demand for feed products in North America, Europe and New Zealand, as well as the UK where Carr’s continued to increase its market share.

Feed-block sales overall were up by 24 per cent.

The company expects further growth in agriculture next year.

It says its overseas businesses doubled their contribution to profits, accounting for almost half the total.

Investment over the year totalled £8.9m. Work started on a new flour mill at Kirkcaldy in Scotland, which will cost £17m and is scheduled to open next autumn.

Mr Holmes said: “Our Silloth flour mill is relatively modern and very efficient but Kirkcaldy dates from the 19th century and costs too much to run. The new mill will be much moreefficient.”

Carr’s restructured part of its borrowing facilities a year ago and has a revolvingcredit of £10m and a term loan of £2.5m committed to November 2014.

It expects borrowings to rise to fund investment and, possibly, further acquisitions.

The board is proposing an 11.5 per cent increase in the final dividend to 14.5p which, added to the two interim dividends, takes the total for the year to 29.0p, up from 26.0p the previous year.

Mr Holmes, who has been chief executive since 1994, is due to step down in March when he will replace Lord Inglewood as chairman. Finance director Ron Wood is also retiring next year.

Mr Holmes’ replacement as chief executive is Tim Davies, managing director of Openfield Group, the largest farmer-owned grain-marketing business in the UK.

Investors welcomed thelatest figures, released to the stockmarket on Monday.

Carr’s shares ended the day 11p higher at 920p.

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