Wynnstay revenue up, pet products drag on earnings

Wynnstay posted its half year results for the six months to 30 April on Wednesday, with the board saying its figures benefited from greater demand for agricultural inputs over the winter period, but were affected by continued subdued trading at its pet products business Just for Pets.

The AIM-traded company reported revenue of £205.32m, rising from £193.24m, with the board saying the increase was partly driven by higher commodity prices.

Adjusted profit before tax, before goodwill and investment impairment charges, was £4.07m - down marginally from £4.08m.

The board said excluding the pet products operation, the group's performance for the first six months improved year-on-year, with profitability ahead.

Reported profit before tax, including goodwill & investment impairment charges, was £0.13m - down significantly from £4.08m - with goodwill & investment impairment charges of £3.94m related to Just for Pets rising from nil in the prior year.

Adjusted earnings per share, before goodwill and investment impairment charges, dropped to 16.84p from 7.22p.

Wynnstay reported a loss per share of 3.38p, compared to earnings per share of 17.22p in 2016.

Net debt at period end - a seasonal peak - was £8.28m, up from £3.90m.

The board put the rise down to commodity price inflation again, and consequent higher average working capital utilisation, adding it had “ample” headroom in its debt facilities.

Net assets at 30 April stood at £85.03m, in line with the £85.06m figure reported for 2016, with the board declaring an interim dividend of 4.20p, up from 4p - an increase of 5.0%

In the agricultural division, revenue was £145.78m with an operating profit of £1.54m.

The board described “greater demand” for many agricultural inputs over the winter period, although feed and arable margins remained under pressure across the sector/

It said its “broad portfolio” of products had helped to smooth marketplace variations.

In its specialist retail division, Wynnstay reported revenue of £59.48m with an operating profit of £2.41m.

The company saw “improved” results at Wynnstay Stores, although its Just for Pets generated a trading loss and as a result a restructuring was underway, with “options” under consideration.

Wynnstay said the trading backdrop had improved, but challenges for the agricultural supply industry remained.

It still said it remained “well-placed” to continue its development.

“The recovery in farmgate prices drove an improvement in demand for many agricultural inputs over the winter period,” said chief executive Ken Greetham.

“Wynnstay's agriculture-related activities, including Wynnstay Stores, have benefited as a result over the first half and show year-on-year progress.”

The trading loss at the company’s Just for Pets chain had impacted the group's overall results and, given the unit's performance, the board recognised a non-cash goodwill and investment impairment charge and was now restructuring the operations and reviewing its options for the business, Greetham explained.

“Looking forward, we are encouraged by the improvement in farmgate prices for our farmer customers but believe that the rate of recovery for the agricultural supply sector will remain tempered.

“Nonetheless, Wynnstay is well-positioned to continue its organic and acquisitive growth strategy.

“The breadth of the group's activities and strong balance sheet provide a solid foundation for further development over the coming years.”