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Poor weather boosts Wynnstay

RESULTS: Wet and cold weather has boosted demand for Wynnstay's grain and animal feed products but, after a decent run, the shares are looking up with events
June 19, 2013

Farming may be an unpredictable business, but Wynnstay's (WYN) broad spread of agricultural interests - from animal feed and grain to country stores and pet product retailing - has proved to be a winning combination. Bolt-on acquisitions - such as November's deal to buy Banbury Farm and General Supplies - have bolstered growth, too.

IC TIP: Hold at 513p

At the half-year stage, for example, the agricultural division increased operating profit by 6 per cent to £3.1m - on sales that were £17m ahead at £172m. A key factor was last summer's wet weather, followed by a cold winter - conditions that not only boosted demand for animal feed, but also at the seed business after washed-out winter plantings had to be re-sown in the spring. The smaller country stores division, meanwhile, grew profit from £2m to £2.6m - on turnover that was £5m ahead at £43.8m.

Looking forward, this year's harvest may be down by around 10 per cent - partly because grains sown in the spring tend to yield less than those sown in the autumn. But that reduction should be offset by higher farm gate milk and animal feed prices.

Broker Shore Capital has increased its full-year pre-tax profit forecast by £500,000 to £8.5m, giving EPS of 37.3p (from £7.76m and 35p in 2012).

WYNNSTAY (WYN)

ORD PRICE:513pMARKET VALUE:£86.1m
TOUCH:508-518p12-MONTH HIGH:513pLOW: 378p
DIVIDEND YIELD:1.7%PE RATIO:13
NET ASSET VALUE: 358p*NET DEBT:26%

Half-year to 30 AprTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20121944.5220.32.85
20132165.2123.63.10
% change+11+15+16+9

Ex-div: 25 Sep

Payment: 31 Oct

*Includes intangible assets of £16.1m, or 96p a share

Aim: Food producers