Carrs breaks trend by driving up profits.

Byline: By Rebekah Ashby

Agriculture, food and engineering group Carr's Milling Industries announced a 19.8% rise in profits yesterday as it begins to see the benefit of two major acquisitions.

The Carlisle company said in its interim results that the acquisitions of Meneba (UK) a year ago and W&J Pye six months later have more than doubled the size of its flour business.

Carr's, which invested in a 55,000sqft purpose-built factory at Carlisle's Kingstown Industrial Estate, recorded a turnover increase of 23.4% and said it was on the look-out for more businesses it could buy.

The company said yesterday's results were slightly ahead of expectations and that further growth is expected.

House broker Investec is pencilling in a pounds 50m sales increase in 2006 and expects profits to rise from pounds 6.1m to pounds 7.6m.

Carr's chief executive officer Chris Holmes said: "Moving forward we will continue to look at acquisitions that fit into our existing businesses.

"There are things we are working on at the moment. Our broker is forecasting that sales will increase from pounds 192.1m to pounds 240m with a full year of Meneba so there is further growth expected in 2006."

Disregarding an exceptional net gain of pounds 2.88m, the company reported operating profit up 26.9% to pounds 7.33m and earnings per share advanced by 19.5% to 47.7p.

The exceptional net gain included the sale of the former site of the group's Bendall's engineering division in Carlisle and rationalisation charges after the acquisitions.

Meanwhile, the operating profits in its agriculture division fell from pounds 5.73m to pounds 5.17m due to reorganisation costs, it said. The engineering arm returned to profit during the period in the 53 weeks to September 3.

Mr Holmes said: "Engineering has experienced a difficult time and lots of companies haven't made any money.

"We have moved to brand new facilities on the Kingston Trading Estate in Carlisle and they are much better premises.

"There is a very good order book so we are well positioned moving forward."

Engineering made a pounds 300,000 profit, compared to a loss of pounds 100,000 in 2004. Food increased its operating profit "substantially" to pounds 2.22m before reorganisation costs from pounds 270,000 last time and turnover more than doubled from pounds 22m to pounds 48m.

Mr Holmes said: "These results were slightly ahead of expectations. Over the years we have always spent capital to improve the business and increase the output.

"In a business like ours the cost of raw materials increase and decrease so in terms of manufacturing efficiency, we have definitely made gains in terms of efficiency in the existing business."

Net assets per share increased by 21.1% to 360.5p while dividends per share of 16p are proposed ( up 18.5%.

Last night shares in Carr's Milling closed up 9.9% at 540p.