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Wynnstay toughs it out

Despite continued price weakness in key agricultural markets, Wynnstay Group has delivered on the earnings front, while bumping-up the interim pay rate.
July 3, 2015

Commodity price deflation may have eroded Wynnstay Group's (WYN) top line, but the agricultural supplies specialist managed to either maintain or increase market share in key product areas. This enabled Wynnstay to increase adjusted operating profits by 5 per cent to £5.1m even though farmers - and, by extension, rural ancillary industries - have been going through a cyclical downturn.

IC TIP: Hold at 590p

Wynnstay's performance was underpinned by continued progress in its retail business, where sales were boosted by outlets added following its acquisition of Carmarthen & Pumsaint Farmers, and improved feed volumes. The combination helped to offset a fall in demand for fertiliser as farmers stalled purchases in anticipation of falling prices.

The group's agricultural division bore the brunt of the slump in grain prices, with revenues down 14 per cent on the 2014 interim to £147m. Wynnstay also had to contend with a reduced contribution from its FertLink joint venture, which has now taken on direct management of some fertiliser trade that was previously the responsibility of its partner in the enterprise - Glasson Grain.

Management maintains that the long-term drivers for the agricultural sector remain in place. But output prices for farmers remain in the doldrums as many staples are still over-supplied in global markets.

Shore Capital expects adjusted EPS of 36.7p for the October year-end, against 34.6p in 2014.

WYNNSTAY GROUP (WYN)
ORD PRICE:590pMARKET VALUE:£114m
TOUCH:580-600p12-MONTH HIGH:625p479p
DIVIDEND YIELD:1.8%PE RATIO:16
NET ASSET VALUE:416p*NET DEBT:10%

Half-year to 30 AprilTurnover (£m)Pre-tax profit ($m)Earnings per share (p)Dividend per share (p)
20142224.719.43.4
20152014.820.33.7
% change-10+3+4+9

Ex-div: 24 Sep

Payment: 30 Oct

*Includes intangible assets of £17.6m, or 91p a share.