The Carr’s Group of feed, rural retailing and engineering businesses has posted better than expected full year results, despite the loss of its new chief executive less than a year after appointment.
The Carlisle-based company has reported an operating profit of £13 million on revenues of £417.3m in the year ended August 28th 2021, compared to £12.2m and £395.6m in the previous year. After adjustment, operating profit is £17.6m (£16.3m).
January 2021 saw chief executive Tim Davies leave the company after seven years, to be replaced by Hugh Pelham from the Australian multinational chemicals company Minova with experience in the engineering sector and international marketing. One of his first actions, after a review of the business, was to separate the Group’s Agriculture division into Speciality Agriculture and Agricultural Supplies segments.
However, Mr Pelham left the company in October 2021 with immediate effect to “pursue other interests” according to a board statement. Group chairman Peter Page – who only succeeded longstanding director Chris Holmes in November 2019 – is acting as executive chairman until a new chief executive can be recruited.
The Group’s Agricultural Supplies division saw a 15.7% rise in adjusted operating profit to £6.7m on revenues of £297.5m, up from £5.8m and £280.7m in the previous twelve months. It comprises the Carr’s Billington Agriculture (CBA) compound feed business, chain of CBA agricultural stores, fuel and farm machinery branches and the feed distribution joint venture Bibby Agriculture.
The CBA total feed volume was up 2.6% from the previous year, with strong farmgate beef and lamb prices and better milk prices in the period helping farmer confidence. This also enabled the company to recover higher feed material costs through increased pricing.
The chain of retail stores remained open throughout the year, using phone and collect/delivery services to support farmer customers during Covid-19 restrictions. Sales were up by 1.6% overall, or 6.3% on a like-for-like basis. There was a strong margin improvement following a focus on cost reduction, with the introduction of standardised pricing across all stores and a new central buying team.
A review of store profitability led to four outlets being closed, leaving 37 sites in the network – including eight with machinery depots. Machinery revenues increased by 8.3% from the prior year. CBA is now the UK’s leading seller of Massey Ferguson tractors. The year saw a new machinery operation opened at the Skipton Auction Mart retail premises, with a new southern Scotland machinery depot and retail store due to be opened in Stranraer shortly.
The Speciality Agriculture division made an adjusted operating profit of £9.5m on revenues of £68.5m (£7.6m and £61.9m in 2020) – a 25.0% increase in profitability.
The division comprises Carr’s businesses manufacturing and distributing feed blocks, mineral supplements and trace element boluses for a global customer base from sites in the UK, Europe and the US. It returned a strong performance across all country markets with feed block sales – including those from joint ventures – 12.3% higher year-on-year.
Equine product sales, including the Horslyx brand, generated the division’s highest revenue growth rate – although from a smaller base than the livestock products. The Group notes that the equine market is becoming increasingly important in all its territories.
Animax, the Suffolk-based bolus specialist acquired in 2018, performed well after two difficult years. Investment to automate production at Animax should come on stream in the current financial year. This will enhance product quality and production efficiency while enabling new product development projects.
In the UK and Ireland, strong beef and lamb prices, and a more ‘normal’ winter helped feed block sales to rise by 10.8% from the previous year. The company has also launched a new range of dairy feed blocks under the Crystalyx brand.
European sales rose by 6% through the German joint venture Crystalyx Products, with the new poultry welfare product Pick Block, launched last year, continuing to grow.
Carr’s US feed block operation saw a 13.4% rise in sales from 2020, with dry conditions in the north-west more than offset by the lifting of coronavirus restrictions. The Group is investing in more sustainable product formulation and packaging and is opening markets in Canada for beef and equine products. New Zealand sales volumes rose by 12.4%, although freight costs and travel restrictions were a challenge. Carr’s intends to keep developing this country market.
Looking ahead, Mr Page says the Group is well-positioned in attractive markets for both its Agriculture and Engineering operations, with good opportunities to grow in the UK and internationally. It continues to invest in manufacturing processes and IT infrastructure to improve efficiency, and sees a positive outlook based upon the strength of livestock and milk prices, despite inflationary headwinds in its raw material supply chains.
Future strategy will be developed against a backdrop of uncertainty with the effect of Covid-19 and global supply chain disruption; raw material and energy price inflation; and labour shortages. Other factors driving change include a diminishing geopolitical enthusiasm for global trade; the generational shift being seen in labour market dynamics; and real concern over the environmental impact of business in general, but particularly ruminant agriculture.
“We will incorporate environmental and social issues into the Group’s strategy,” says Mr Page. “The need to reduce the impact of livestock farming on the environment is clear, providing opportunities for the Group’s Agriculture businesses.”