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Wynnstay buoyed by warm weather

The agriculture supplies business reported record profits on the back of a hot, dry summer
January 24, 2019

Agricultural supplier Wynnstay (WYN) made good on its November trading update by delivering "record profits and revenues" during the 2018 financial year. Chief executive Gareth Davies attributed this performance to improved farmer spending patterns and a recovery in farmgate prices, while a long, dry summer added a timely boost to the second-half performance.

IC TIP: Buy at 423p

The agricultural division – the largest by sales – was the star performer, with operating profits up 28.4 per cent to £4.29m. That was despite some margin pressure, as volume-focused competitors pushed prices down. Unfortunately, this trend is expected to continue throughout 2019.

The specialist agricultural merchandise division also performed well, with operating profits up 16.7 per cent to £5.53m. This was aided by acquisitions such as Countrywide Farmers, which has expanded the group’s geographical reach. Mr Davies said Countrywide previously focused on "rural dwellers", but he wants to target professional farmers who can buy more products more often. That said, he admits the company is happy "to take anybody’s money".

Analysts at Shore Capital expect pre-tax profits of £9.5m during the year to October 2019, giving EPS of 38.9p, compared with £7.9m and 33.1p in FY2018.

WYNNSTAY (WYN)   
ORD PRICE:423pMARKET VALUE:£84m
TOUCH:415-430p12-MONTH HIGH:513pLOW: 403p
DIVIDEND YIELD:3.2%PE RATIO:11
NET ASSET VALUE:460p*NET DEBT:1%
Year to 31 OctTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20144148.535.310.2
20153778.334.711.1
20163547.229.712.0
20173917.732.312.6
20184639.539.113.4
% change+18+24+21+6
Ex-div:28 Mar   
Payment:30 Apr   
*Includes intangible assets of £14.9m, or 75p a share