Trading Update

Carr's (CARR.L), the Agriculture, Food and Engineering Group, issues its second trading update for the year ending 29 August 2015. This update relates to the 19 week period which ended on 11 July 2015. 

Overall trading continues to be in line with the Board's expectations for the full year.

Agriculture

Global sales of feedblocks are up year on year. The USA operations have delivered a strong performance, making market share gains. In addition, volumes have grown as beef breeding herds have continued to restock following the recovery from drought conditions across many areas of the USA. In the UK the abundance of quality winter forage reduced Crystalyx® feedblock volumes. Scotmin continued to achieve further sales growth in the period, driven primarily by our branded products Megastart® and Quattromag®.

In the UK, feed volumes have increased in the period despite a tough backdrop of market pressure, particularly in the dairy sector where the impact on dairy farm incomes from the low farmgate milk price has had a negative impact on both feed margins and sales of Aminomax®. Declining dairy farm incomes has also placed pressure on the machinery business, although its performance has been positive due to the breadth of the franchise offering and quality customer service. The oil division has performed well with volumes up year on year. 

Retail sales have continued to perform ahead of both last year and the Board's expectations. Expansion of the country store network continued, with the successful opening of Selkirk and a new store at Rothbury, which opened on 1 July 2015. This was enhanced by the strategic acquisition of Reid & Robertson Ltd in Scotland in 12 June 2015, which extends the reach in West Scotland with new locations at Balloch, Oban and Ayr. This takes the total number of country stores to 30, with 4 satellite locations at auction marts and livestock centres. 

Food

The Group's food division, operating from three strategically-located sites around the UK, continues to perform well with volumes ahead of last year. The state-of-the-art flour mill in Kirkcaldy has generated further efficiencies, cementing Carr's reputation for quality, service and technical expertise, resulting in several new customers being won across the division.

The retail market in which the division operates remains challenging, with the multiples rationalising their sliced bread offering and consumer shopping habits continuing to change. However, previous investment in the division's infrastructure ensures that Carr's remains well placed to adapt to changing retailer requirements and consumer demands.

Engineering

The UK nuclear market continues to show signs of recovery and increased activity, particularly from Sellafield with new contracts secured for the division. However, the Japanese and Russian markets remain subdued. In the oil and gas market, the low oil price continues to have an adverse impact on oil exploration related customers.

Performance at Wälischmiller remains on track for the year. The business has been awarded a contract for the design and supply of a robotic manipulator from ITER. ITER is the international collaboration for the creation of an experimental fusion reactor based in France. This contract underlines the strength of the business and its reputation.

Previously announced delays in Bendall's project for BP Shah Deniz are ongoing, with the majority of the vessels now expected to be delivered by the end of September 2015; the remainder are due to be delivered in Spring 2016. The newly established design department in Bendalls has been awarded its first contract from Sellafield for the design of a skip conveyor system. A further contract from Sellafield for the manufacture of a pressure vessel was also received in the period. The combined value of these contracts is in excess of £1.25m.

The low oil price has had an adverse impact on orders at Chirton and this looks set to continue into the next financial year. Chirton's move to new premises in North Shields was delayed but is now complete. This delay, a greater level of disruption than expected, and issues commissioning new equipment, resulted in extra costs and more lost production time than planned. This has adversely impacted results in the short term.

Carrs MSM, the UK-based manipulator business, continues to perform well and ahead of expectations.

Dividend

The Board announces that a second interim dividend of 0.925 pence per share (2014: 0.85 pence per share), an increase of 8.8%, will be paid on 9 October 2015 to shareholders on the register on 18 September 2015. The ex-dividend date will be 17 September 2015.

Tim Davies, Chief Executive, commented:

"Despite Carr's continuing to operate in mixed market conditions, we remain confident that the Group will meet the Board's expectations for the full year. This confidence is due to the breadth of the Group's geographical footprint and its ongoing commitment to, and investment in, assets and innovation."

The Group expects to issue its Preliminary Results for the year ending 29 August 2015 on 9 November 2015.

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