Carr's issues profit warning on US feeds, UK manufacturing hitches
Updated : 11:15
Agriculture and engineering group Carr's warned that profits for the year will be "significantly below" expectations, despite an improving UK agriculture performance.
On top of a delay to a significant contract in the UK manufacturing business, which was revealed in a trading update in January, the US feed block has also been hit by a slower than anticipated recovery in cattle prices.
In January Carr's had said that volumes and margins in the US feed block business had been under pressure as a result of falling cattle prices for producers.
"This pressure continued for a longer period than originally forecast and although cattle prices have begun to increase, the recovery in that market is now expected to be slower than anticipated," it said on Thursday.
"Consequently, this will result in significantly reduced profitability in our USA feed block business as the market recovers in the short to medium term."
The UK agriculture business, on the other hand, has seen further signs of returning customer confidence, driven by improving returns for dairy farmers.
UK agriculture is now anticipated to exceed the board's expectations for the current financial year, with feed blocks an "exciting opportunity" for growth and management keen to pursue international expansion in South American.
The engineering division had a slow start to the first 26-week period of the year to 4 March as a result of a significant contract delay in the UK manufacturing business that was expected to impact upon production activity throughout this financial year.
Management tried to mitigate the financial impact of this delay by cutting costs, looking to win new work to replace the delayed contract and accelerating the existing order book.
"While progress has been made with cost-cutting, winning sufficient new work in the short term and accelerating the existing order book has been challenging, especially in the oil and gas market. Consequently, despite some success, the level of new work secured has been insufficient to mitigate the impact of the delay."