One of Britain’s main arable inputs and grain marketing firms, Frontier Agriculture, says it has bounced back with a 26% increase in pre-tax profits.
The company – which operates 40 sites across the UK including Crimond, Invergordon, Newmachar, Perth and Turriff – posted pre-tax profits of £32.4 million in the year to June 30, 2021.
Turnover in the year was down 11% to £1.438 billion, from £1.612bn previously.
The bulk of sales – £1.315bn – were in the UK, while sales to the rest of the world were down 33% to £122.5m.
In his report accompanying the accounts, Frontier Agriculture chairman Jose Nobre said Frontier had experienced a “very significant bounce back” in overall performance.
He said “the worst planting conditions in a generation” in autumn 2019 and the lowest wheat harvest in 30 years in 2020 resulted in unpredictable and challenging conditions for the grain industry.
“Despite the small wheat crop, volatile price movements, a sizeable barley export campaign, and one of the biggest ever wheat importing programmes resulted in a strong grain trading performance,” said Mr Nobre in his report.
‘Earnings recovered well from the exceptional events’
“The recovery in wheat plantings to near normal levels enabled the seed, crop nutrition and crop protection activities of Frontier to bounce back from 2020.
“The company’s earnings recovered well from the exceptional events of the previous year delivering an operating profit of £34.6m (prior year £28m) – a very significant bounce back in overall performance.”
Mr Nobre said the drop in sales during the year was down to lower volumes of grain trading, and profit on ordinary activities after taxation showed a 10% return on total capital employed.
During the year Frontier invested £9m in the business and Mr Nobre said: “We continued to strengthen the crop inputs and non-grain related activities with new crop protection warehousing capacity and further investment in trials and formulation of novel chemistry.”
He said crop inputs accounted for 52% of the group’s total annual gross earnings, while grain-related earnings were equivalent to 45% of the group total.
Mr Nobre said Covid-19 continued to impact the company during the financial year, however measures put in place at the start of the pandemic enabled operations to continue without significant disruption.
Looking forward, he said: “I anticipate further strengthening in underlying earnings as we see the full-year impact of our acquisitions, grain marketing partnerships, new agronomists, capital investment and the continued rollout of our strategic plans for growth.”
Acquisitions during the year included Cambridgeshire-based Fengrain Limited.