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Wynnstay ups dividend

Trading remains challenging for Wynnstay, but the agricultural supplies group has boosted margins
January 28, 2016

Low farm output prices mean trading remains tough for Wynnstay (WYN), but the agricultural supplies group is a resilient beast. A slump in agricultural commodity prices may have reduced revenues for the year to October by an estimated £32m, but both the agricultural and specialist retail divisions were more profitable than 2014.

IC TIP: Hold at 502.5p

In the agricultural division, higher volumes of lower unit values for most feed, grain and fertiliser products boosted operating profit by 8.7 per cent to £4.13m. The uplift in specialist retail was primarily due to an increase in outlets, which should be further supported this year by a contribution from Agricentre, which was acquired at the end of 2015.

Future growth will be underpinned by further deals, though Wynnstay will maintain its preference for "knocking on doors" rather than waiting for distressed targets to come up for sale. Chief executive Ken Greetham believes short-term organic growth is also possible, despite deteriorating trading conditions for UK farmers.

House broker Shore Capital expects adjusted pre-tax profit and EPS of £7.3m and 29.9p for the 2016 financial year, down from £9m and 37.6p in FY2015.

 

WYNNSTAY (WYN)

ORD PRICE:487.5pMARKET VALUE:£95m
TOUCH:480-495p12-MONTH HIGH:603pLOW: 479p
DIVIDEND YIELD:2.3%PE RATIO:13
NET ASSET VALUE:427p*NET CASH:£2.1m

Year to 31 OctTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20113466.930.27.8
20123767.835.08.5
20134138.036.49.3
20144148.535.310.2
20153778.336.311.1
% change-9-2+3+9

Ex-div: 24 Mar

Payment: 29 Apr

*Includes intangible assets of £18.3m, or 94p a share.