22nd Jan 2020 09:30
(Alliance News) - Wynnstay Group PLC on Wednesday said profit declined in its most recent financial year due to unseasonal weather as well as a reduction in spending by farmers.
Shares in Wynnstay were down 4.4% at 279.75 pence in London in morning trade.
The agricultural products supplier said pretax profit for its year ended October 31 was GBP7.6 million, a 20% drop from GBP9.5 million. The underlying figure fell 17% to GBP8.0 million.
While revenue rose 6.0% to GBP490.6 million, cost of sales rose 6.9%, leading gross profit to increase by 0.5% to GBP62.0 million.
Wynnstay has two divisions. One of these is Agriculture, which covers feed, fertiliser, and seed manufacture. Pretax profit from this division fell sharply, dropping 30% to GBP3.0 million from GBP4.3 million. The division's feed sales were hurt by an "abnormally warm winter", with reduced volumes reportedly "in line with the sector".
The other division is Specialist Agricultural Merchanting, which trades through a network of depots and supplies products for farming such as hardware and bagged feed. Its pretax profit fell 5.5% to GBP5.2 million due to "reduced demand for bagged feed and feed-related products".
Wynnstay is proposing a final 9.40 pence per share dividend. Combined with the interim dividend of 4.60p per share, this lifts the total annual dividend 4.8% to 14.00p from 13.36p.
Chief Executive Gareth Davies said: "This has been a difficult year for the agricultural market as a whole, and Wynnstay's results reflect this. Weather conditions reduced demand for some of our core products, particularly feed, while reduced farmgate prices and ongoing political uncertainty lowered farmer confidence and spending across the sector."
Farmgate prices are lower than they were in 2019 and Wynnstay noted uncertainty about "what Brexit means for the agricultural industry". As such, the firm thinks farmers will be "circumspect" in their spending and investment plans over 2020.
Davies said: "As we look across the new financial year, we expect another challenging period. Nonetheless, we are well-placed to navigate through, and see opportunities to potentially strengthen our position within the agricultural supply chain sector, supported by our strong balance sheet."
By Anna Farley; [email protected]
Copyright 2020 Alliance News Limited. All Rights Reserved.
Related Shares:
Wynnstay