Established Cumbrian firm Carr’s Group is set to sell its agricultural supplies arm for £44.5 million to streamline the business.
Carr’s Group announced to the London Stock Exchange today that it intended to dispose of its interests in Carr’s Billington to Edward Billington & Son Ltd.
It said: “The disposal will enable the group to focus on its speciality agriculture and engineering divisions, both of which provide a greater opportunity for growth and historically have achieved higher profit margins.”
It added that the sale would allow it to invest around £10m into the speciality agriculture division, plus target acquisitions and provide around £4m of extra liquidity into the engineering division to fund potential new larger and longer-term customer contracts.
The board added that it intended to arrange a full buy-out of the group defined benefit pension scheme for about £4m.
Peter Page, executive chairman, said: “We are today setting out a clear strategy for growth in earnings and shareholder value. This proposed transaction will enable Carr’s to focus on its speciality agriculture and engineering divisions and provide funding for strategic growth and investment, thereby enabling us to build upon our industry-leading positions in these two higher margin divisions.
The agricultural supplies division, trading as Carr’s Billington Agriculture, has been a key part of the group’s growth and development over the past 20 years.
“Following the strategic review, the board is confident that now is the right time for a single owner and management team to take the business forward. We are confident that Edward Billington and Son, with its long-term commitment to the sector, is well placed to fulfil this role.
“This transaction represents a compelling and immediate realisation of value for all of our shareholders, streamlines the business and provides the Board with a clear strategic direction for driving future growth. We look forward to updating on further progress in due course.”
Carr’s Agriculture was established in 1990 following the merger of several smaller firms across Cumbria and became Carr’s Billington after it joined forces with Edward Billington.
The business operates compound feed mills at Carlisle, Lancaster and Stone and has blend plants at Kirkbride, near Carlisle, Lancaster and in Wales. It currently has 32 country stores across the North of England, Scotland and Wales, several of which have machinery sales and service departments and fuel distributions depots.
Carr’s Group’s latest available results, for the 26 weeks ending February 26, show that the agricultural supplies division made £3.9 million in operating profit – up from £3.3m in 2021 and retail sales rose 4.1 per cent.
The results said: “The division performed well overall in the period. Livestock and milk prices remain high, although rising input costs continue to present a significant challenge for farmers.
Total feed sales volumes were 2.5 per cent lower compared to the prior year, although selling prices were 26.3 per cent higher in the period primarily due to the pass through of rising input costs. Machinery revenues remained strong and 0.4 per cent ahead of the prior year.”
Speciality agriculture saw a profit of £6.5m, down from £8.3m in 2021 and engineering’s profit for the same period was £1.5m, up from £0.9m in 2021.
Overall, the company said: “During the second half, an improved performance in engineering, where order books stand at record levels, together with continued positive trading in agricultural supplies are expected to offset volume and pricing challenges in speciality agriculture. The board is confident in the prospects of all three divisions in the medium term and its full year expectations are unchanged.”
