Harbro to expand after cutting borrowing

SCOTLAND'S leading independent animal feed manufacturer, the Harbro Group, is pushing ahead with expansion plans following a rise in turnover and profitability.

The Aberdeenshire-based company, which manufactures animal feed at Tore Mill, Inverness, Smiddyseat, Turriff and Birkhill, Lesmahagow, and operates 11 Country Stores, boosted turnover in the year to 30 June, 2009, by 3 million to 65m and saw pre-tax profits rise by 359,000 to 1.2m.

"Our market share increased and all companies across the group showed strong performance," said managing director Graham Baxter. "The retail division of Harbro Country Stores continued to perform well."

Group companies include Harbro, feedmobile operators Feedmix and supplement manufacturers Strathclyde Nutrition.

The improved financial performance is attributed to a firm policy of reducing borrowing in the face of the banking crisis. Borrowing fell during the year by 2.1m to 9.5m and the group benefited from lower interest rates. Profit before interest increased by 38,000.

"Attention to cash flows and the reduced bank base rate had a positive effect on the performance of the business," said Baxter. "The increase in profitability was almost fully attributable to a reduction in interest paid. It is now the prime target of all group companies to reduce overall borrowing levels over the next three years."

Nonetheless, the company is planning further expansion in the south-west of Scotland, where it has established a strong presence following the opening of the Birkhill feed plant three years ago, representing an investment of 7m.

New sites are being sought to expand the company's retail division, which specialises in animal health, equine, countrywear and pet products. The group will benefit this year from the opening of larger stores at Stirling and Fort William.

Financial performance in the first eight months of the current financial year is ahead of expectations and Baxter is bullish about future prospects.

Although dairying is continuing to suffer from low milk prices, the pig, poultry, sheep and beef sectors are enjoying improved returns.

"The world has a pent-up demand for meat and dairy products and the UK is not self-sufficient in food production," Baxter pointed out. "The best-performing livestock units in the future will be those that adopt systems based on a technical approach delivering the best performance by the animals and the required product quality for retailers and consumers.

"This is the area where we consider that Harbro and associated group companies have much to offer and we will continue to base the future growth of the group in delivering products based on the highest technical standards."