24th Jun 2015 08:12
LONDON (Alliance News) - Agricultural supplies company Wynnstay Group PLC expressed confidence that trading conditions for its farming customers will improve in the near future, as it posted a higher pretax profit despite its revenue taking a hit from commodity price deflation.
The company said its pretax profit for the six months to the end of April was GBP4.8 million, up from GBP4.7 million a year earlier, as revenue fell to GBP200.6 million from GBP222.5 million. Revenue was pushed lower by commodity price deflation in the half, and the group said the trading environment in the period was difficult, characterised by low output prices for farmers.
Profit for the group remained on track thanks to progress in its retail business and increased feed volumes, which offset a change in trading patterns in the arable sector, which created challenges across the industry, the company said.
Still, Wynnstay pushed up its interim dividend to 3.7 pence from 3.4 pence.
Agricultural revenue took the biggest hit in the half, down to GBP147.3 million from GBP171.5 million, primarily due to commodity price deflation in some core product groups, including grain and traded raw materials. These issues combined with lower revenue from its FertLink joint venture, with has now taken on direct management of some fertiliser trade which had previously been handled via Glasson Grain Ltd, its partner.
The commodity price deflation had less impact on its retail operations, however, where revenue increased to GBP53.2 million from GBP50.8 million, boosted by additional country stores and like-for-like growth for its Wynnstay Stores and Just for Pets businesses.
The company said that though output prices are currently at "unacceptably low" levels for many farmers, the balance of trade should reverse in the foreseeable future, subsequently improving trading conditions for Wynnstay's customer base.
"Trading conditions for farmers have been difficult for the last two years. However the industry is cyclical and the macro economic factors around world demand remain compelling. Our recently completed business planning exercise highlights the growth opportunities available to the group and the board remains confident about Wynnstay's continued future growth, built on the existing solid foundations," said Chief Executive Ken Greetham.
"The business continues to benefit from its broad base of activities and overall current trading is in line with management expectations," Greetham added.
Wynnstay shares were up 0.2% to 589.00 pence on Wednesday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance
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