Carr’s Milling issues profit warning

Carr’s says food and certain parts of its agriculture
division are affected while the feed block businesses, particularly in theUSA,
are trading well, as is engineering.

The England
Cumbria-based group said it expects a significant deterioration in its flour
margins on the back of a massive increase in wheat prices and higher energy
costs. The group said it envisages little change in the foreseeable
future.

High cost raw materials
The higher cost of raw materials,
particularly wheat and energy for the compound feed business has not been fully
offset by the increases in sales prices, culminating in lower
margins.

“Farm gate milk price received by dairy
farming customers remains unsustainably low, with no certainty of a change in
the coming months, exacerbated by delays in receipt of the Single Farm Payment,”
it said in a statement.

Carr’s Milling said the
recent events have led it to reconsider its forecasts and now expects to see a
reduction in group pre-tax profit compared with market expectations for the year
to September 2007.

Less fertilizer purchases

Chief executive Chris Holmes
believes that, at this early stage of the peak selling season, farmers will hold
off fertiliser purchases and therefore sales will be down year-on-year, with
lower margins.

On the positive side, feed block
revenue in the
US
and the

UK

is ahead of budget and is higher
than last year. The engineering division is trading slightly ahead of budget.