This update relates to the 18-week period which ended on 7 January 2017.
Overall, Carr's continues to trade in line with the Board's expectations for the current financial year.
Agriculture
UK Agriculture has begun the year strongly, with compound feed volumes ahead of the prior year. Market pressures continue to have an impact; however, the signs of stability that were highlighted in the Group's results announcement in November 2016 still remain. Fuel volumes were ahead of the prior year, and machinery sales have also shown signs of recovery in the first quarter. Our Retail business has continued to grow with performance ahead of expectations.
Feedblock sales in the UK have started strongly, with volumes ahead of last year. US feedblock sales volumes are in line with the prior year as the impact of falling cattle prices for producers begins to take hold. Both volumes and margins are expected to remain under pressure during the rest of this financial year. Detailed planning for the construction of the new low moisture feedblock production facility at Shelbyville, Tennessee, is progressing well, with completion of the facility expected by autumn 2017 and this should provide a platform for growth in the medium term.
Overall, the Agriculture division is performing ahead of the Board's expectations.
Engineering
The Engineering division has had a slower than expected start to the year, due to a significant contract delay in the UK Manufacturing business, which will impact production activity throughout this financial year. Work on this contract is now expected to commence towards the end of the year, and action is underway to limit the resulting financial impact on the Engineering division's performance. In the medium term, however, there is a substantial order book and pipeline in place so prospects remain encouraging.
The remote handling businesses combined are performing in line with expectations, with MSM delivering on its life of plant contract at Sellafield. As anticipated, Wälischmiller's activity this year is weighted towards the second half, with some significant contracts scheduled including the first sale of the V1000 (“Robbie”). Further new contracts have been secured, including a contract for Magnox valued at €1.5m, which will also benefit the UK Manufacturing business, and an A1000 power manipulator contract for a key research centre valued at €2.3m. Excellent progress is also being made on the product development programme, and the integration of STABER, acquired in October 2016, is continuing in line with expectations.
Overall, as a result of the contract delay, the Engineering division is performing below the Board's expectations.
Financial Position
The Group's financial position remains strong. Net debt as at 3 December 2016 was £16.9m compared to net cash of £8.1m as at 3 September 2016 as a result of the STABER acquisition and the special dividend paid in October 2016.
Undrawn banking facilities at 3 December 2016 amounted to £32.5m allowing management to continue to review suitable acquisition opportunities whilst investing in the Group's existing businesses both in the UK and overseas.
Dividend
Subject to shareholder approval at today's AGM, the proposed final dividend of 1.9 pence per share for the year ended 3 September 2016 will be paid on 13 January 2017 to shareholders on the register at close of business on 16 December 2016.
Tim Davies, Chief Executive, commented:
“We have delivered a strong performance in our UK agricultural operations during the period, supported by improved confidence in the outlook for our core farming customers. However, this has been partially offset by market pressures in the US, relating to falling cattle prices, and the delay of a significant contract in our engineering business, which is now expected to commence towards the end of this financial year.
“The performance during the period once again demonstrates the value of the diversity of our business when operating in challenging market conditions. We are pleased to report that overall we are trading in line with the Board's expectations.”
The Company expects to issue its interim results for the 26-week period ending 4 March 2017 on 12 April 2017.