Overall trading remained in line with the board’s expectations for the full year, despite tough market conditions, reported the business in a trading update for the 19 weeks to July 11.
Investec analyst Amanda Mallard noted flour – which was supplied to Warburtons among other customers – was running at higher volumes year-on-year and the Kirkcaldy mill had “helped lift margins too”.
Asda reportedly losing £500,000 a week
While the retail bread market remains competitive – with Asda reportedly losing £500,000 a week in plant bread sales – that had no direct impact on the group this year, she added.
Investec retained its ‘buy’ advice on Carr’s stock.
The group’s said its food division – operating from three sites around the UK – continued to perform well with volumes ahead of last year, said Carr’s.
“The state-of-the-art flour mill in Kirkcaldy has generated further efficiencies, cementing Carr's reputation for quality, service and technical expertise, resulting in several new customers being won across the division,” it claimed.
The retail market remained challenging, as the multiples rationalised their sliced bread offering and consumer shopping habits continued to change. “However, previous investment in the division's infrastructure ensures that Carr's remains well placed to adapt to changing retailer requirements and consumer demands.”
Lower dairy farm incomes
In the UK, feed volumes had risen despite market pressures, particularly in the dairy sector. The impact of lower dairy farm incomes from the low farmgate milk price had a negative impact on feed margins.
Falling dairy farm incomes was also reported to have pressured the firm’s machinery business. But its performance was said to have been positive due to the breadth of the franchise offer and customer service quality.
Global sales of feedblocks were claimed to be rising year-on-year.
Tim Davies, chief executive, said: “Despite Carr's continuing to operate in mixed market conditions, we remain confident that the group will meet the board's expectations for the full year.
“This confidence is due to the breadth of the group's geographical footprint and its ongoing commitment to, and investment in, assets and innovation.”
The group expects to issue its preliminary results for the year ending August 29 on November 9.