Short-term dip in profits expected

Carr’s Group has announced that the situation regarding demand for feed blocks in the US and utilisation in the Engineering division’s UK manufacturing operations continue to be problematic. Both were identified as potential issues in the January trading update. The overall improvement in the agricultural sector has continued, but an uplift in profitability in this activity is not expected to be sufficient to offset the shortfall elsewhere. We revise our estimates and reduce our indicative valuation, which is based on the medium- and long-term prospects for the group, from 161p/share to 158p/share.