Frontier Agriculture ‘s latest full year figures saw a reduction in operating profit and revenues from the 2022/23 high, due to the wet autumn 2023 which severely disrupted farm plantings. But the group’s diversification strategy – particularly its founding investment to establish Oxbury Bank – meant pre-tax profit was very similar to the previous year.
The company made an operating profit of £37.05 million on a turnover of £1.76 billion in the year ended 26th June 2024, compared to £52.09m and £2.36bn in the previous year. The latest pre-tax profit is £40.06m (£40.27m in 2023). Net assets at the year end stood at £294.9m (£282.69m). 56% of gross profit was generated through crop inputs and advice, with 43% from the grain marketing business.
The near 30% fall in group operating profit reflects the 25% smaller UK winter wheat planted area following the exceptionally wet autumn of 2023 with a consequent reduction in spring crop protection product and fertiliser purchases. Revenues fell from the previous year high, which were driven by higher crop and input prices caused by the global energy cost spike following the war in Ukraine.
However, Frontier says its investment over the last three years in a number of adjacency businesses, designed to help build robustness in future earnings during periods of trading volatility, has paid off this year, while also providing valuable services to farm and supply chain customers. The principal investments in this category have been in agricultural banking through Oxbury Bank, where Frontier was a founding investor in 2018; oat milling with the Navara plant in Northamptonshire; and agricultural data analytics through its acquisition of YAGRO.
Frontier’s investment in the Oxbury business appreciated in value by £16.8m in 2023/24, which offset the downside at group operating profit level, allowing the business to achieve an overall profit before tax performance in line with the previous financial year, against the wider industry trend.
“Like many of our farmer customers, diversifying income streams in parallel with volatile trading activities provides some security of earnings,” comments Frontier group senior executive director Mark Aitchison. “Our adjacency investments are all in areas we believe can benefit our customers, providing for us both the opportunity to bring more certainty. Robust earnings enable us to invest in the core business at a consistent rate during periods of downturn, and ensures we continue to develop products and services for the future.”
The latest full year saw Frontier invest £25.4m in capital expenditure, up from £14.7m in the previous twelve months. This included its purchase of the Fengrain 90,000 tonne grain store and the Boston Seeds business, plus an investment in the CCm Technologies organo-mineral fertiliser business. The group also spent £3.9m on R&D in the period.
Frontier managing director Diana Overton, who took up her new role earlier this month, says: “We demonstrated the resilience of our inputs – outputs business model and the dedication of our employees. We remained profitable, protected by our strong balance sheet, and invested in better understanding our customers.
“Our investment in Oxbury has proved very successful and the bank is now able to provide totally independent and expert support to the UK agriculture sector. Its dedicated commercial team understand farming and can deliver personalised financial solutions, with a unique combination of face-to-face service and speed of action built around an agile digital platform.”
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Frontier Agriculture ‘s latest full year figures saw a reduction in operating profit and revenues from the 2022/23 high, due to the wet autumn 2023 which severely disrupted farm plantings. But the group’s diversification strategy – particularly its founding investment…
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