Carr's sees full-year ahead of expectations after strong start to H2

Agriculture and engineering group Carr's surged on Monday as it posted a jump in first-half profit and said full-year results were likely to be "slightly ahead" of its previous expectations following a strong start to the second half.

In the six months to 3 March, adjusted pre-tax profit was up 22% to £10.9m on revenue of £200.1m, up 13.2%. Operating profit rose 21% to £9.2m and adjusted earnings per share increased 29.6% to 9.2p.

The company, which lifted its interim dividend by 13.2% to 1.075p, hailed a strong performance in UK agriculture, with steadily increasing farm incomes continuing to reinforce confidence in the outlook for the industry.

Over the period, feed volumes were up 6.3% thanks to the successful integration of recent acquisitions and increased market demand, while global feed block sales volumes were 11.2% higher.

Chief executive officer Tim Davies said: "We are very pleased with the performance of the group during the first half of the year, which slightly exceeded the board's expectations for the period. This strong performance demonstrates the excellent recovery made in our engineering division and builds upon the strategic progress made during the last year.

"In UK Agriculture, we now have greater visibility on the impact Brexit may have in relation to direct payments to farmers in the near term, although uncertainty remains on the issue of trade agreements both within the EU and the rest of the world. The clarity relating to direct support, together with improving farm incomes, means we are starting to see renewed confidence in the outlook for the industry. Our engineering business is recovering well and we have strengthened management to drive further growth."

Carr's said the second half has started well and it now expects full-year results to be slightly ahead of previous expectations.

"We are confident that our breadth of product offering, investments in acquisitions and research, and our international footprint leaves us well positioned for further growth across both our divisions in the medium term," said Davies.

N+1 Singer said: "With shorter term Brexit-related uncertainties improving as a result of the agreement of the transition period and healthy medium term prospects for the specialist feed block and engineering businesses, particularly in nuclear, there seems significant scope for a re-rating from the sub-11 calendar’18 PER on likely revised estimates."

At 1000 BST, the shares were up 12% to 153.50p.