Carr's sells fertilisers arm to Irish group in £19m deal

AGRICULTURAL group Carr's Milling Industries yesterday agreed to sell its fertiliser business in a £19 million deal with Irish farming group Origin Enterprises.

The Carr's business, CM Fertilisers, operates from two Scottish sites, in Invergordon and Montrose, along with Silloth in Cumbria.

Carr's said the disposal, which needs to be approved by shareholders, will strengthen its balance sheet with some 3m of the proceeds also used to reduce its pension fund deficit.

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Turnover for CM Fertilisers for the year ended 28 August 2010 was 59.3m and earnings before interest and tax 1.9m.

In the first half of the current financial year, Carr's said the fertiliser business experienced strong demand amid continuing high cereal prices and anticipation of higher fertiliser raw material prices.

Chris Holmes, chief executive of Carr's which also owns other interests across Scotland, said although the business was performing well the disposal should reduce the volatility of the group's profits as it would remove exposure to commodity price fluctuations.

"The strong balance sheet and low gearing leaves Carr's in a strong position for further investing in existing parts of the business and to seek acquisitions," he added.

Tom O'Mahony, chief executive of Origin, said the deal will provide his group with "strategic opportunities to reduce the impact of volatility of input costs" across the business.

Origin, which is quoted on Aim, owns farming interests, including a significant stake in Continental Farmers Group which was set up by Forfar farmer Mark Laird in 1994 with the backing of a number of Scottish and Irish investors.

Continental Farmers, which has built up farming interests across western Ukraine and northern Poland which offer relatively low costs and a favourable climate, is itself planning to float on Aim later this month.

Origin Enterprises had bought a 20 per cent stake in Continental Farmers in 2008 for €12m.

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It later increased its stake to 39 per cent with its total investment currently valued at about €20m.

Carr's other interests include Johnstone Wallace Fuels and Wallace Oils which supply agricultural and domestic customers in Dumfries and Galloway, Cumbria and Lancashire.

Its food division includes a flour mill in Fife and last June it bought Ayrshire animal supplements firm Scotmin for 4.8m from the Buccleuch Group.

Animal feed retailer Borthwickburn, which has three sites in the Borders and the north of England, was also sold to Carr's by the Buccleuch Group for 800,000.

Carr's said it is currently well placed to take advantage of improving agricultural markets and increasing demand for food, driven by global and UK population growth."We are confident that Carr's will continue to trade in line with management's expectations for the full year," it said.

Shares in Carr's closed down 24p - or 2.9 per cent - at 814p yesterday.