Lower wheat prices lift Carr's profits
get its food business back on track in the first of half of 2005,
despite freak floods and fire hitting sales hard, reports Chris
Mercer.
Carr's announced a year-on-year 14 per cent increase in net profit to £1.67 million, plus a one-off bonus of £4 million from its disposal of the Bendalls Engineering site last October.
The results are a good sign the firm is heading back in the right direction after what it termed "a disastrous increase in wheat prices" halved the company's food business profits last year.
Now, Carr's said that falling wheat prices over the last few months had eased pressure on the food business and that this sector was likely to perform best for the company in 2005.
Britain's milling industry will welcome the news from Carr's following turbulent 18 months on the UK wheat market.
A lack of quality wheat suitable for milling from the 2003 harvest meant that prices rose by around 60 per cent in eight months, leaving many UK millers struggling just to break even.
Prices fell slightly in 2004 yet remained volatile, and bad weather delays in the 2004 harvest caused prices to rise again last autumn with quality in some regions thought to be at its lowest for a decade.
Julian Bell, senior economist at the Home Grown Cereals Authority, warned that price volatility on the UK wheat market was there to stay.
But Carr's expects to be boosted in 2005 by its two recently acquired Meneba mills at Kirkcaldy in Scotland and Maldon in Essex, both with port facilities.
These two pretty much single-handedly lifted Carr's first half sales 9.3 per cent to £78.4 million, and Carr's said it expected them to be making profit by the end of its financial year.
Without them sales would have been only £70 million, down £1 million on 2004. The firm lost months of business at the McVities biscuit factory in Carlisle after freak flooding hit the region in January.
And a fire at the Rathbones plant bakery shortly after this harmed Carr's supplier sales further.
Even so, McVities' Carlisle branch is now back on-stream and Carr's was confident it could make progress in 2005. Chief executive Chris Holmes said the firm was eyeing more acquisitions as part of a plan to expand its food division with a focus on innovation and premium products.
Holmes was positive about the prospects of Carr's Breadmaker high quality flour brand, which was launched two years ago. "Sales of it are growing very well. It just shows that people will pay for quality when they can get it," he said, though refusing to discuss sales figures for the brand.
