Shares in Carr's Milling Industries jumped to their highest for nearly two years after the flour-to-feeds group again raised profits hopes, helped by a recovering fertilizer market.

The company - which in April forecast "appreciably higher" profits than a year before, and in July said it was trading ahead of analysts' forecasts – said that investors were still underestimating its rebound from a decline in performance last year.

A "strong trading performance" over the summer meant its results for the year to the end of August were still on course to beat market expectations.

Analysts are currently expecting Carr's to report underlying annual pre-tax profits up by some 16% at £8.7m.

Acquisition spree 

Part of the improvement is down to acquisitions, including that of assets of fertilizer wholesaler AgChem in March and of Scottish feed groups AC Burn and Scotmin, which Carr's said were "proving to be an excellent strategic fit".

The company has continued its takeover spree with the purchase of English-based feed group Forsyths, which closed on Tuesday.

However, Carr's also flagged fertilizer sales ahead of expectations, following an "excellent growing" period over the summer, when high crop prices encouraged farmers to fork out on nurtrients.

The group's Avail product, which eases take up of phosphate nutrients, had made "excellent progress".

Wheat hedge

Although the surge in grain prices since late June has proved "challenging" for the company's flour business, the division had avoided some of the damage from soaring raw material costs by "covering forward wheat requirements where it has forward four sale commitments".

Indeed, the business was also encouraging customers into contracts which will allow it to buy wheat ahead, and so reduce its exposure to market volatility.

Carr's shares closed 5.3% to 592.50p in London, their highest finish since October 2008.