Wynnstay’s (WYN) 2019 half-year results reflect a challenging period for agricultural suppliers. Compounding the standard exceptional weather story – this time an unusually mild winter – weaker farmgate prices and more cautious farmer spending saw operating profit fall by 14 per cent to £4.37m. This is despite commodity price inflation assisting revenue growth.
In the agriculture division, the warmer winter proved a double-edged sword, reducing demand for feed during the traditional peak months, but driving fertiliser and grass seed sales as farmers were able to work land earlier and turn out their livestock. Margins remain under pressure, so although revenue increased by 22 per cent to £195m, operating profit declined by 13 per cent to £1.79m. Feed sales are expected to dip further in the third quarter as customers use up excess stock.
In the smaller specialist agricultural merchanting business, similar depressed demand for winter products pushed operating profit down by 14 per cent to £2.67m. The Stanton Farm Supplies acquisition has strengthened the group’s dairy sector proposition in South West England.
Shore Capital anticipates adjusted pre-tax profit of £7.7m and EPS of 31.8p for the October 2019 year-end, rising to £9.3m and 38.3p in FY2020.
| WYNNSTAY (WYN) | ||||
| ORD PRICE: | 330p | MARKET VALUE: | £66m | |
| TOUCH: | 320-340p | 12-MONTH HIGH: | 513p | LOW: 290p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 467p* | NET DEBT: | 16% | |
| Half-year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 219 | 4.9 | 20.14 | 4.41 |
| 2019 | 261 | 4.1 | 17.01 | 4.60 |
| % change | +19 | - | - | +4 |
| Ex-div: | 26 Sep | |||
| Payment: | 31 Oct | |||
| *Includes intangible assets of £15m, or 75p a share | ||||
