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Wynnstay battles tough agricultural markets

Agricultural products group Wynnstay is battling depressed commodity prices, although its retail operations are making good progress
January 23, 2015

Squeezed margins for UK farmers led to flat full-year revenues at agricultural products group Wynnstay (WYN), while underlying pre-tax profit rose less than 2 per cent to £8.6m.

IC TIP: Hold at 600p

In fact, the core agricultural division - responsible for three-quarters of group sales - saw its revenue fall by more than 4 per cent year on year, while the operating profit here slumped 22 per cent to £3.8m. That was mainly down to margin pressure on agricultural inputs and lower-than-expected market activity in fertiliser and grain. Significantly, mild weather conditions led to subdued feed demand in the first half. Management, however, is hopeful that output prices will rebound as global food demand increases.

It's also hoped that acquisitions into the retail division will provide further support. Indeed, and buoyed by acquisitions, the specialist retail division - which includes the agriculturally-biased Wynnstay Stores, Just for Pets and Youngs Animal Feeds - increased revenue by 16 per cent to £104.6m, while the unit's operating profit rose 10 per cent to £4.9m.

Broker Shore Capital expects adjusted pre-tax profit of £9m for 2015, giving adjusted EPS of 36.7p (from £8.5m and 34.6p in 2014).

WYNNSTAY (WYN)
ORD PRICE:600pMARKET VALUE:£115m
TOUCH:595p-605p12-MONTH HIGH/LOW:681p540p
DIVIDEND YIELD:1.7%PE RATIO:17
NET ASSET VALUE:404pNET CASH:£2.75m

Year to 31 OctTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20102445.927.57.1
20113466.930.27.8
20123767.835.08.5
20134138.036.49.3
20144148.535.310.2
% change-+6-3+10

Ex-div: 26 Mar

Payment: 30 Apr

*Includes intangible assets of £17.3m, or 91p a share