Wynnstay profit hit by warm winter, Brexit uncertainty
By Michele Maatouk
Date: Wednesday 26 Jun 2019
(Sharecast News) - Wynnstay posted a drop in first-half profit on Wednesday, pinning the blame on an unusually warm winter and caution amid Brexit uncertainty.
In the six months to 30 April 2019, pre-tax profit at the agriculture company slipped to £4.1m from £4.9m in the same period a year ago. The company said an abnormally warm winter reduced demand for feed and feed-related products and pointed to more cautious farmer spending due to lower farmgate prices and Brexit uncertainty.
Revenue rose to £260.6m during the half from £218.5m, mainly due to commodity price inflation, and the interim dividend was lifted by 4.3% to 4.60p a share.
In the agriculture division, revenue ticked up to £195.1m from £160.1m but operating profit declined to £1.8m from £2.1m amid reduced demand for feed during the traditionally peak winter months and as mild and drier weather conditions drove demand for fertiliser and grass seed.
In the specialist agricultural merchanting division, revenue rose to £65.5m from £58.3m and operating profit fell to £2.7m from £3.1m. Wynnstay said sales benefited from the expanded depot network, reflecting the previous year's acquisition, but the mild winter led to reduced bagged feed sales.
Chief executive Gareth Davies said: "The combination of abnormally warm weather, which reduced feed demand during traditionally important months, and more cautious spending patterns by farmers in reaction to a softening in farmgate prices and Brexit uncertainties, created challenges for the agricultural supplies sector. Wynnstay's results reflect this. We continued investing in our manufacturing and production plants, and have also expanded our farming customer base, strengthening our presence in the South West with an acquisition.
"Wynnstay's long-term prospects within the industry remain strong, and at this stage of the financial year, the board's expectations for the full year outcome remain unchanged."
At 0930 BST, the shares were up 1.6% at 325p.
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