World Grain - May 2013 - 18

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Carr’s Milling profit increases 36.2%

For more information, see Page 130.

CARLISLE, ENGLAND — Carr’s Milling Industries PLC announced
on April 16 that during the 26 weeks ended March 2 proﬁt before tax increased by 36.2% to £10.1 million from £7.4 million for the same period
in 2012, reﬂecting increased levels of activity across all its businesses.
The construction of the new state-of-the-art mill at Kirkcaldy at a
cost of £17 million is progressing well, Carr said, and is on target to
start production in September. The efﬁciencies of the new mill are expected to further improve operating margins in the next ﬁnancial year.
In Agriculture, adverse weather conditions over the winter greatly
helped the growth of its proprietary brands in the U.K., Europe and
the U.S. Progress was also made in its Food and Engineering divisions
where strategic major capital investments will beneﬁt future proﬁtability.
Carr said the combination of increasing revenue and a continuing focus on cost control has resulted in an improvement in group
operating margin to 3.8% (2012: 3.4%), and group operating proﬁt
increasing by 31% to £8.8 million (2012: £6.7 million). The group’s
share of proﬁt after tax from associate and joint venture companies
increased to £1.7 million (2012: £800,000).
The inclement global weather patterns have had a signiﬁcant positive effect on demand for Carr’s feed and feed block products. In the
U.K., the wet summer and autumn had an adverse impact on the quality of forage available and the duration and intensity of the 2012-13
winter has stimulated demand for compound feeds, in particular. With
extremely wintry conditions persisting into the Easter period, a high
level of demand for Carr’s feed and feed blocks has continued into the
second half of the ﬁnancial year.
In compound feeds, which operate in a more competitive market, the
recovery in sales volumes, from the declines seen in 2012, owed much
to weather-stimulated demand and also reﬂected Carr’s product and service levels. The increase in compound feed revenue was largely volumerelated, although selling price increases were made to offset raw material
input increases, margins remained under pressure during the period.
The exceptionally poor U.K. harvest of 2012 led to a signiﬁcantly
greater dependence on overseas wheat, which combined with higher
transport and storage costs as well as lower than normal ﬂour extraction rates, made for a difﬁcult trading environment in the U.K. milling industry. Against this backdrop, Carr’s Flour Mills has operated
exceptionally well, the company said. Given the continuing overcapacity in the industry, margins remain low but in the period revenue
increased by 8% and proﬁt before tax rose by 10.9%.
The quantity and quality of the U.K. wheat harvest was the poorest on record, with only 2% of all milling grade samples passing the
normal speciﬁcation parameters. Wheat prices were volatile, driven by
declining supplies from Eastern Europe and concerns over the impact
of the drought in the U.S. Midwest. The outlook for the U.K. is for
another small harvest from this coming season, as farmers were simply
unable to plant the normal acreage due to persistently wet conditions.
Accordingly, the reliance on imported wheat is likely to continue
in the short to medium term. Consequently, the group’s two mills,
Kirkcaldy and Silloth, located at ports, enable Carr’s Flour Mills
to leverage cost-effective access to both U.K. and European wheat.
With the closure of a competitor mill, Rank Hovis in Glasgow, at
the end of March, some overcapacity has been removed from the
Scottish market, which will further beneﬁt the mill at Kirkcaldy, the
company said. The ongoing rationalization, coupled with the poor
harvest, marks a change in the U.K. milling market. Carr’s Flour
Mills is poised to capitalize on this with its port-located mills and
the commissioning of the new mill at Kirkcaldy, the company said.
May 2013 / World Grain / www.World-Grain.com

http://www.World-Grain.com http://www.cfcai.com

World Grain - May 2013

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