Carr's Milling Industries

Agriculture group Carr's Milling Industries (CRM) is firing on all cylinders, with results for the year to 3 September ahead of broker expectations.

The fully listed concern has also benefited from the recent £19m disposal of its fertiliser business, which has reduced its exposure to volatile commodity prices. It has also eliminated borrowings, leaving Carr's with net cash of £4.6m. With a strengthened balance sheet, the plan is to invest in its operations, as well as seek out acquisitions.

In the 53-week period, Carr's achieved a 25% hike in sales to £373.3m, as pre-tax profits increased 35% to £10m. The dividend is up 8.3% to 13p, taking the total for the year to 26p. In addition, the balance sheet shows NAV at a healthy 643p a share.

Agriculture remains the mainstay of Carr's. Here, sales soared 27% to £272.7m, driven by favourable farmgate prices and milk prices starting to rise. The severe winter also helped boost demand for its Caltech range of feedblock products. Feed supplements business Scotmin Nutrition was acquired last year, and is doing well following reorganisation.

Overcapacity in the flour industry continues to impact its three mills, while volatility in the wheat market also served to dent its food operations. In engineering, Carr's achieved a solid second-half performance, particularly its Wälischmiller arm, which has more than doubled its order book to £38m. Work in the nuclear sector is also growing.

Chief executive Chris Holmes says 'current trading is good, and ahead of this time last year'. Broker Investec forecasts 2012 pre-tax profits of £12m, EPS of 91.7p and a 27p a share dividend. The shares were recommended in Growth Company Investor in May 2010 at 522.5p, so the rerating since has been impressive. With a broad spread of businesses, Carr's is a quality operator on a harsh rating. Buy/hold.