Britain’s largest arable inputs and marketing firm has hailed a “very strong performance” with turnover and pre-tax profits up.
Frontier Agriculture, which operates across 44 sites in the UK including Crimond, Invergordon, Newmachar, Perth and Turriff, reported turnover of £1.447billion for the year ended June 30, 2017.
This is up almost 26% on the year before when turnover stood at £1.387billion.
The company, which carries out marketing for north-east grain co-operative Aberdeen Grain, posted a 7% increase in pre-tax profits to £34.805million.
UK sales increased to £1.311billion from £1.162billion previously, while sales to the rest of the world decreased to £136.175million from £225.441million before.
In accounts filed with Companies House, group chairman David Yiend said: “For the fifth year running record global wheat yields raised inventories to over 30% of production – dampening commodity price volatility and weakening global crop values.
“In the UK bearing sterling and tighter wheat supply and demand supported feed wheat values to around £140 per tonne for much of the year – above the average cost of production.”
He said the market for crop inputs continued to experience significant margin pressure as farmers sought to align their costs of production more closely with output prices. Grain exports were slow and difficult for much of the marketing year due to the low exportable surplus and the relatively high value of wheat.
“The combination of low market volatility, low export surplus, and pressured crop inputs gross margins made it a tough trading environment for all farmgate businesses,” added Mr Yiend.
“Despite these challenges Frontier once again demonstrated its resilience and resourcefulness delivering an operating profit of £36.5million – a very strong performance indeed.”
He said the group, which employs more than 1,050 people, had committed £8million to new capital expenditure in the year, towards “customer-facing assets in grain storage, seed processing, crop protection distribution, crop trials and smart IT software”.
Mr Yiend added that the acquisition of Shropshire-based service agronomy business BCW Ltd would strengthen the company’s presence in the West Midlands, and that the previously acquired companies of Intracrop and Anglia Grain Services had performed strongly in the year.
“The company has proved once again that in spite of unpredictable weather, market and commodity price cycliality, it remains uniquely structured and resourced to deliver real value through strong collaborative partnerships with its farmers and with food, feed and biofuel sector customers,” added Mr Yiend.
The accounts also revealed that the highest-paid director was awarded £741,000 in the year, down from £758,000 before.
Frontier managing director, Mark Aitchison, said: “2017 was a challenging trading environment for everyone in the industry – which makes our performance all the more encouraging.”