Higher profit on lower turnover at Countrywide

Rural supplier Countrywide Farmers returned an operating profit of £3.6m for the year ending 31 May 2010, an increase of just over £1m on the year.

Turnover was slightly down on the year at £206m, mainly caused by lower cereals and fertiliser prices.

Chief executive John Hardman described the group’s performance as a “big uplift in the current climate”.

Mr Hardman, who has completed 25 years with the business and took over as managing director in 2005 and more recently became chief executive, has led the former co-operative away from in-house animal feed manufacturing to reduce operating costs.

The restructuring of the business cost Countrywide £2.2m in 2005, but since then the business has paid down debt and increased profitability. Production of animal feeds is now outsourced to BOCM Pauls.

Countrywide’s agriculture division contributed significantly to the 2010 results, with operating profits up 66% on sales that fell from £94m to £83m due to lower commodities prices. Compound feed sales were up 13% on the year, “substantially ahead of expectations”, Mr Hardman said.

“That growth has been driven by winning more business with existing customers as well as taking on new ones. We’re not distracted by managing a feed-milling business and so have been able to invest more in our people, particularly in technical training with Kingshay.”

The firm’s retail business saw like-for-like sales increase 4% on the year despite problems in the wider economy. Overall sales in Countrywide’s 45 retail stores rose by 8% to £75m, with three new stores opened and a significant investment in staff training.

“We’ve improved product ranges in our stores and focused on better retail offers. I don’t think you can run any retail operation these days without competitive offers and tight cost control,” he said. Countrywide is to open a another new retail store at Melksham, Wiltshire, later this month.

The firm’s fuel and energy business contributed less to overall profits than last year, but Mr Hardman described 2009’s performance as “exceptional”.

“We didn’t expect to repeat that this year – our operating profit in this area was down from £1.9m to £1.2m.” In addition to household kerosene and vehicle LPG fuel, Countrywide now sells up to 40m litres of tractor diesel a year, and the firm has acquired a small renewable energy business to balance its fossil fuel operation, Mr Hardman added.

However, he admitted sales of household fuels in the coldest winter for many years had been disappointing.

Countrywide has about 11,000 shareholders of which about 6500 are farmers and the firm employs about 1000 staff. Mr Hardman said the firm had successfully registered its name as a trademark. “This is a tremendous achievement and recognition by the authorities of our brand as the leading business supplying the rural community.”

Mr Hardman said Countrywide’s management was concentrating on “re-engineering” the business to become more customer-focused.