Carr’s Group weathers flooding crisis in Cumbria

By Alice Foster contact

- Last updated on GMT

Prince Charles visits the United Biscuits factory in Carlisle in the wake of Storm Desmond
Prince Charles visits the United Biscuits factory in Carlisle in the wake of Storm Desmond

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Carr’s Group has survived an “enormous” flooding crisis, which saw its flour activities disrupted by floods at a major customer’s manufacturing plant.

The Cumbrian food and agriculture group declined to name the customer affected, although the United Biscuits factory​ in Carlisle is known to have flooded.  

Carr’s helped flood-hit rural customers in the wake of Storm Desmond, while flood water also inundated three feed mills owned by one of its associates. 

Chief executive Tim Davies paid tribute to those involved in the flood relief and confirmed that insurance cover would mitigate any notable financial impact. 

“Cumbria in particular has faced enormous challenges as a result of the flooding following Storm Desmond,” ​Davies said in a trading update published today (January 5). 

‘Direct impacts of the floods’ 

“Despite the direct impact of the floods on some of our employees, customers and suppliers, the direct financial impact on the group is covered by insurance.  

“The speed of our recovery owes much to the resilience and tenacity of our employees.” 

The trading update for the 18 weeks to January 2 2016 said that trading remain in line with expectations and the company was positive about the future.

Net debt was £31.9M on November 28 2015, compared with £30.4M on November 29 2014 and £24.4M on August 28 2015. 

“The floods in Cumbria directly affected one of our major customers, with a knock-on impact on the supply of flour into that business,”​ the update said. 

‘Operational after a week’​ 

“The agriculture division was directly affected with one of our associate’s three feed mills being flooded; however, through the dedication of their employees, it became partially operational after one week.

“Many of the company’s rural and agricultural customers were directly affected by the floods, and Carr’s has worked with those affected to assist where possible and ensure that needs were met.” 

The company traces its history back to 1831 when Jonathan Dodgson Carr founded what was to become one of Britain’s biggest bakery businesses.

In 1908 the flour mill was floated as a separate company, which diversified into animal feed business shortly after World War Two and acquired its first engineering business in 1996. This company became Carr​s Group. 

Meanwhile, United Biscuits acquired the remainder of the original Carr’s bakery business, including the McVities biscuit factory in Carlisle, in 1972.

Prince Charles visited this factory at the end of last month after it was flooded during Storm Desmond. In April Carr’s is due to issue interim results, for the 26 weeks to February 27 2016, on April 11.

As the flood recovery continues in the north of England and Scotland, Morrisons and Nestlé have each pledged £100,000​ to help flood victims.

Investec’s view

Carr’s has issued its Q1 ​[first quarter] trading update confirming that overall trading remains in line with expectations.

The weather has been challenging in the quarter, with flooding in Cumbria causing some disruption to a feed mill in Lancaster (now largely operational again) and some indirect impact on flour activities (a customer manufacturing plant has been flood damaged).

However, the financial impact of these issues will be mitigated by insurance. The exact timing of insurance payments is unclear as yet, so this could affect 1H/2H​ [first half/second half] profit phasing.

  • Statement, Investec 
 

Related topics: Cereals and bakery preparations

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