Higher global food prices and subsequently rising farm income have caused the profits of German farm machinery maker Claas to surge. The family-owned business sees enormous growth potential in Asia and eastern Europe.
Claas revenues in the last business year, which ended on September 30, jumped to a record 3.4 billion euros ($4.4 billion) - up 4 percent from the previous year, the farm equipment maker announced Thursday.
On the back of a 4 percent rise in operating profits, net profit surged to 232 million euros, which was a staggering 28 percent more than in the 2010/2011 business year.
The world's fifth largest agricultural machinery maker said the result had been achieved despite massive investments to the tune of 304 million euros, out of which some 191 million euros had been spent on enlarging production in France, Russia, India and Hungary.
"The new business year has started similarly promising," said the head of the firm's management board They Freye, adding that he expected capital expenditure among customers to remain high.
Freye noted that the record result was due to rising income in the farming industry in the wake of soaring food prices last year. Agriculture businesses, especially in the emerging markets of Asia and eastern Europe, were driving growth as they were seeking to step up mechanization of their operations.
Claas announced investments of 200 million euros in Research & Development, as well as additional spending of 150 million euros to improve sales structures abroad next year. Despite the high expenditure, the family-owned business - which celebrates its 100th anniversary in 2012 - said it expected revenues to remain stable or rise slightly next year.