pi4
06 Sep 2016
Re: Disposal of Food division I also think Brexit played a part.
Meanbugger
06 Sep 2016
Re: Disposal of Food division Kintra, I am sure you are right that it is opportunistic. I get the impression that market conditions are much tougher in flour milling than generally appreciated by investors with margins under severe pressure across the industry. Nearly all the independents are family owned businesses with about 200 years of history. It's not disastrous if their profits go from a few million pounds to zero in a price war as they have seen it all before and take a very long-term view. Carr's saw a step up in profits after the £17 million investment in the Kirkcaldy mill but it would appear that there's nothing more to go for. White bread sales in Scotland are never going to increase. Whitworths seem to be the only company that has acquired mills in the last few years and this deal makes them a national player and probably in their eyes better able to withstand the competitive pressures.Carr's also relies on imported wheat more than the family-owned independents who tend to source locally so the fall in sterling is another short-term negative factor. I agree this wasn't the plan but given what seems to be happening in the industry I think it is by far the best outcome.The Carrs Group website/ Investor Relations page has the latest Investec research note showing that this deal is dilutive for eps in 2017 and 2018 but we get the special dividend.
kintra
05 Sep 2016
Re: Disposal of Food division i invested for a few reasons but including a gut feel that people still need bread during a recession. Am a bit surprised by the disposal given the investment in the scottish mill and all the talk about it being state of the art etc. The press release tries to say this is all part of a grand long term plan. Feels much more opportunistic than that.
Meanbugger
05 Sep 2016
Disposal of Food division Carr's have rather surprisingly disposed of their flour milling business on the last day of their financial year. You could argue that they are selling the family silver as it was the original business in the group but on the other hand it was high turnover/ low margins in an over-supplied market dependent on the supermarkets at the end of the day. It probably was too risky as well as the floods in Carlisle affected a major customer and the temporary closure of the Forth Road Bridge added to costs not to mention how weather can affect wheat harvests across Europe. Much better to own businesses where there are fewer factors outside of their control.The price looks very good although it looks as if there will need to be a write-down of assets in the balance sheet. The special dividend is a surprise too although they are keeping some of the proceeds for investment in their other businesses. Big question for me is what will happen with the stake held by the largest shareholder, Heygate & Sons who are flour millers themselves and who now have no obvious reason to keep their shareholding. Also the large special dividend implies that the investment opportunities are pretty thin on the ground so they are keen to keep the balance sheet efficient so as not to dilute earnings per share. I think we might see some further interest from income funds buying for the special dividend but where this leaves the shares after they go ex-dividend I am not sure. Overall I think it is a sound strategic deal at a great price that they did well to achieve. However it does increase expectations for them to find some bolt-on acquisitions to add value in the other businesses.
pearlsasinger
19 Jul 2016
Re: Trading Statement I agree MB.Still worth holding for its diversification-if nothing else.And it appears to have corporate integrity -and real tangible reasons for its existence.
Meanbugger
19 Jul 2016
Trading Statement Overall I'd say it is satisfactory. The engineering side has had a rough time recently with the oil and gas sector in decline and the nuclear side now experiencing delays. US feedblocks continue to do well. Strangely the statement completely avoids mentioning currency but it seems likely that the fall in sterling after the referendum result is the main reason for this year's results still being in line with the board's expectations. They've also made a tiny acquisition. Phoenix Feeds which is one of Blackburn's leading animal feeds suppliers. I think shareholders were hoping for more excitement on the acquisition front.We all knew it would be a tough year. Even with a 370 day trading period and sterling showing a 10% decline boosting the contribution from the US and German businesses, the expectation is for maybe 1% growth in profits and earnings compared to last year. The outlook remains fairly dull in terms of growth unless the Company can find some decent agricultural supply businesses to acquire.
Meanbugger
24 May 2016
Re: Interim Results Not a lot of news to be gleaned from the Carrs Billington website as they seem to be happy to literally let the grass grow under their feet. Silage and maximising the return from grass does seem to be the hot topic for dairy farmers these days.In other news Forfarmers which is the largest ruminant compound feed producer in the UK (after it bought BOCM Pauls 4 years ago) has had a successful debut today on Euronext Amsterdam. Let's hope they start hinting at further consolidation in the UK to generate a bit more interest in the sector.
Boring Bernie
11 Apr 2016
Re: Interim Results Yep, it looks like you were pretty much spot on there meanbugger. Profits are pretty much broadly flat on lower revenue, and probably will be for the full year, so no surprises there. I'm happy to hold, but in no rush to buy more.
Meanbugger
10 Apr 2016
Interim Results The interim results are due to be announced tomorrow. I'm not expecting anything very interesting. The winter was exceptionally wet and mild with sales of compound feed, fuel oil, farm machinery and UK feed blocks all expected to be down. Hopefully US feed blocks will again ride to the rescue and allow interim profits to be more or less maintained at about £10m on significantly lower turnover for the group, maybe under £200m. There should be an increase in the dividend to make the shares worth holding.
numberbiter
06 Jan 2016
Re: AGM report An exit would be bad for all of us; it is not just the Carr's Group that would suffer, shareholders would suffer horrendous losses.
picstloup
06 Jan 2016
AGM report The AGM yesterday was the mostly pretty positive. Chris again demonstrated that he is not really chairman material, but Tim Davies, the CEO, gave a very measured and authoritative presentation. The messages I took out were:- they have plenty of free cash to fund suitable purchases if necessary- flood damage wasn't as bad a it could have been (Hexham store was reopen within 2 days, Lancaster mostly within a week) and was disruption largely covered by insurance- lower weather-related feed block sales in the UK were offset with a booming market in the US, which he expects to grow further when a 4th block plant comes up to full capacity this week- the fall in reveunue is because the price of commodities has fallen, not a genuine fall income - margins are well up- they have ambitions to expand the (UK) geographic footprint further into areas they are not represented in, hence, eg, the Brecon store- farmers' falling incomes will have an effect- oil profits are well up on higher margin on lower prices, and, despite the mild weather, volume is up as well: they didn't suffer any serious disruption from the floods, moving operations from Lancaster to Langwathby- food: volume and margins are being squeezed by intense competition, but Kirkaldy gives them an edge- engineering: Chirton has basically lost its oil exploration business due to the collapse in oil prices, but is now working on its first Sellafield contract, while Walischmler and Bendall's are both doing very well, and the design team is expanding into new products, especially in the high margin robotics business- although they are keen to find suitable acquisitions, they also expect further organic growthIn answer to a question from the floor, Tim said that an exit vote in the EU referendum "would be bad for farmers in Cumbria and bad for Carr's Group."
Cane1
06 Jan 2016
Re: Gratifying but why? Probably news that they are insured for loss of of buiness due to flooding, Additionally the Telegraph Questor column rates them a buy due to there animal feed business in the USAand the engineering side picking up more orders. It also says that the company has a reasonable yield and low pe.
Meanbugger
06 Jan 2016
Re: Gratifying but why? I think it is due to the fact that a lot of the recent problems including the flooding of the Hexham store are covered by insurance including cover for business interruption. Also the board are still saying the full year should meet expectations.
Boring Bernie
06 Jan 2016
Re: Gratifying but why? Delayed reaction to the trading statement which has calmed nerves on the effect of the floods perhaps ?
tejo
06 Jan 2016
Gratifying but why? The rise in the sp this morning was gratifying, especially against a falling market, but why. Were there some encouraging news items released at yesterday's AGM does anyone know?
