CARLISLE, ENGLAND — Carr’s Milling Industries PLC recently reported that earnings attributable to shareholders for the year ending Aug. 30, 2014, increased 4.6% to £12,893,000 ($19,590,000), from £12,315,000 the previous year.
Profit before taxation was up 7.8% to £16.6 million from £15.4 million a year ago. Adjusted earnings per share were up 5.6% to 130.8p. The company attributed the profit increase to strong operational performance across the business.
Revenue was down 8.4% to £429 million from £468.1 million a year ago.
“We have delivered another record year of pre-tax profit, building on successes of recent years,” said Chris Holmes, chairman. “In Food, our investment in Kirkcaldy is expected to realize further efficiencies in the current year and, despite some short-term pressures expected in our Engineering division, the medium term prospects remain highly positive. Overall, we have made a good start to the current financial year and the board will continue to look at how best to maintain growth and achieve optimal returns for our shareholders. We remain confident for the full year and excited about the long-term growth opportunities for the business.”
In the Food segment, profit before tax for the period increased 309.7% from £600,000 to £2.3 million in this financial year, even though revenue was down by 7.5% to £87.1 million, reflecting lower wheat prices.
The first wheat was milled at the company’s new mill in Kirkcaldy in the summer of 2013. The commissioning process went well and the mill is now meeting all expectations with regard to performance and reliability, said Tim Davies, chief executive.
“The benefits of the new mill have been delivered from improved operational efficiency, and the commercial benefits derived from increased customer confidence in our ability to produce high quality flour, milled to the highest standards of product integrity,” he said. “We expect to deliver further increased financial benefits from the new mill during the next financial year.”
Combined sales volumes of the company’s other mills (Silloth in Cumbria and Maldon in Essex) were positive. Both mills increased sales to bakers supplying the expanding bake-off category. The Maldon mill continued to increase its presence in the markets for ethnic flour.
Carr’s re-launched its branded retail flour products during the year and the new packaging won first prize at the Marketing Design Awards 2014, Davies said.
The harvest of 2013 in the U.K. was of much higher quality than the extremely poor harvest of 2012. Although the quality of the crop was much improved the size of the harvest was small, estimated at 12 million tonnes, about 2 million tonnes below normal levels.
“The portside location of our two northern mills at Kirkcaldy in Scotland and Silloth in Cumbria provide us with the flexibility to source wheat from the overseas and U.K. markets providing both quality and value,” Davies said.
This year there has been a switch from sourcing wheat from mainland Europe to a greater proportion sourced and shipped from the South of England. In a market where logistics will always be important, this flexibility is essential, he said.
“The now fully operational flour mill at Kirkcaldy has delivered the anticipated benefits to the Food division and this, coupled with the continuing excellent customer service from all our flour mills, has resulted in the expected increase to the profit before tax for the division,” Holmes said.
In the Agriculture segment, profit before tax for the period increased by 9.5% to £9.6 million from £8.8 million the previous year, on revenue down by 7.5% to £314.9 million. Profit before tax for the period including contributions from associate and joint ventures, increased by 4.3% to £12.1 million.
In the Engineering segment, profit before tax for the period fell by 11.7% to £3.7 million on revenue down by 19.6% to £26.9 million.
Looking ahead, Davies said each of the divisions faces challenges over the next 12 months, including pressure on farm incomes, changes in the demand patterns for flour and changing political conditions in key markets.
“Despite this our geographic and product diversity, coupled with the investments made in previous years, provide us with a platform for growth, and our experienced management and skilled employees will enable us to deliver this growth,” Davies said. “The board remains confident in reaching its full year expectations.”
Holmes noted that the Food division is expecting to realize further efficiencies from the Kirkcaldy mill and will also benefit from some significant new business at the Silloth mill.