Demand for animal feed products and a poor UK wheat harvest combined to help milling group Carr’s post record half-yearly pre-tax profits.
The group, which is building Scotland’s first new flour mill for a generation at Kirkcaldy, saw revenues increase to £231.6 million in the first half of the year from £196m at the same point in 2012.
The firm posted pre-tax profits for the first half of the year of £10.1m more than a third higher than the £7.4m achieved in the same period last year.
Carr’s said a significant part of the uplift was due to increased demand for its animal feed products in the UK, Europe and the USA.
The trading figures provoked a strong reaction from investors, with its stock rising more than 10% in morning trading.
The company said adverse weather conditions for grazing, such as the heavy snow which blanketed Britain in the early part of the year, meant farmers had turned to its feed products to supplement the diets of their livestock.
In terms of animal feed alone the gloomy weather delivered a one-off return to Carr’s of £1.1m in the period. The firm’s fuels business also benefited with a 10% increase in volumes and a restoration of overall margins following a fall last year.
The food business which takes in the company’s Fife-based operations also experienced growth in the first half, with revenues up 8% on the previous year due to extra wheat being imported through its dock facilities at Kirkcaldy and at Silloth in Cumbria.
Chairman Chris Holmes said demand had been created by a poor UK wheat harvest in the first half of this year a situation the company expects to change little within the months ahead.
“The poor quality harvest that prevailed in the UK played very much into our hands,” Mr Holmes said.
“Having port facilities at Kirkcaldy where we are building a new £17m mill and at Silloth, we have been able to import wheat to make sure we can mill the flour Carr’s is renowned for. We planned for this to happen.”
Mr Holmes said the investment at Kirkcaldy was on track and the company expected the new mill to open in September.
The facility will be able to process 20,000 tonnes of wheat more than the current Kirkcaldy mill and will be the firm’s largest handling facility once operational.
Carr’s said they expected the Fife facility would improve its top line by delivering increased operational efficiency, greater flexibility and helping to cut down on raw material costs.
“Overall we will produce between 240,000 and 250,000 tonnes of flour, and Kirkcaldy will be the biggest market.
“These well-invested assets will be in a position to grow business profitability which is reflected in forecasts.”
Investec analyst Nicola Mallard said Carr’s which has a market capitalisation of £92m had made strong progress in the first half of the year, with the result exceeding its forecast of a pre-tax profit of £9.3m for the period.
She said: “Interim results from Carr’s are ahead of expectations, with adjusted profit before tax growth of over 40%, although there was some benefit from unusual weather patterns in the UK and USA.
“However, all divisions contributed to the improved results.
“We expect some further weather benefit in the second half, and lift our full-year forecasts by 14% to reflect this.”
Shares closed up 131p at 1,190p on Tuesday.