Agriculture and engineering company Carr’s Group PLC (LON:CARR) raised its full year guidance following robust first half trading, sending its shares up 12% to 154p each in morning trading.
The group posted adjusted pre-tax profit of £10.9mln in the six months ended March 3, up 22% on the same period a year earlier.
Revenue grew 13.2% to £200.1mln, driven by a strong performance in its agriculture division, which supplies feed blocks for livestock, farm machinery and runs a UK network of rural stores.
Feed volumes jumped 6.3%, boosted by the successful integration of recent acquisitions – including Pearson Farm Supplies last October – and increased market demand.
Carr’s said conditions in UK agriculture have continued to improve with steadily increasing farm incomes “continuing to reinforce confidence in the outlook for the industry”.
A sustained recovery in the cattle market has also provided “favourable market conditions”, the company added.
More clarity on Brexit for farming industry
Under a proposed Brexit deal, farmers have been guaranteed subsidies at the current EU level until the 2022 election. A special fund will also be set up to help the UK agriculture sector adapt to a post-Brexit environment.
However, without an EU-UK trade deal, farm exports face tariffs from March 2019 when the UK exits the bloc.
“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,” said Tim Davies, the chief executive of Carr’s.
“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.”
Carr’s said its engineering arm, which makes bespoke equipment and provides technical engineering services for nuclear, oil and gas, pharmaceutical and renewable energy industries, made a strong recovery following a tough 2017 when it was hurt by a major contract delay.
Carr's hikes dividend and raises guidance
The company raised its interim dividend by 13.2% to 1.075p.
"Trading in the second half has started well and the board now anticipates that trading for the full year will be slightly ahead of its previous expectations," said Davies.