Wynnstay Group Plc
(“Wynnstay” or the “Group” or the “Company”)
Interim Results for the six months ended 30 April 2024
Performance affected by challenging trading conditions as anticipated
Expectations for the full year remain unchanged
KEY POINTS
Financial
· Resilient performance in challenging trading conditions created by:
o exceptionally wet weather conditions, which disrupted the seed planting season;
o weaker farmer sentiment; and
o falling commodity prices, which impacted manufacturing operations.
· Revenue of £328.5m (2023: £409.1m) with the year-on-year reduction driven by commodity price deflation, which accounted for c. £69.0m (86%) of the decrease.
· Gross profit down slightly at £40.2m (2023: £41.7m) – reflecting lower activity, however unit margins across categories were broadly maintained.
· Adjusted operating profit1 of £4.7m (2023: £5.8m).
· Adjusted pre-tax profit2 of £4.8m (2023: £6.0m). Reported pre-tax profit of £4.4m (2023: £5.5m).
· Basic earnings per share of 14.3p (2023: 19.3p).
· Net cash3 at 30 April 2024 was £18.5m (2023: net debt of £7.3m) and benefited from soft commodity price deflation. The Group’s annual working capital requirement is typically highest at this point.
· Net assets increased to £136.3m/£5.91 per share (2023: £132.4m/£5.87 per share).
· Interim dividend of 5.6p (2023: 5.5p)
1Adjusted operating profit excludes amortisation of acquired intangibles, share based payment expenses and non-recurring items.
2Adjusted profit before taxation excludes amortisation of acquired intangibles, share based payment expenses, non-recurring items and the share of tax incurred by joint ventures.
3Net cash / (debt) excluding IFRS 16 leases.
Operational
· Agriculture Division – revenue of £257.0m (2023: £333.6m), adjusted operating profit1 of £1.3m (2023: £2.3m):
o seed and fertiliser sales significantly impacted by wet weather;
o manufactured feed volumes 2.3% lower. Margins maintained.
· Specialist Agricultural Merchanting Division – revenue of £71.5m (2023: £75.6m), adjusted operating profit1 of £3.3m (2023: £3.4m).
o sales only c. 0.8% lower adjusting for deflation.
· Higher labour, distribution and packaging costs, partially offset through ongoing efficiency initiatives.
· Investment programmes on track – increasing feed manufacturing capacity and installing next phase of solar panel arrays.
Current Trading and Outlook
· Trading in April and May was ahead of the prior year and further weather-deferred sales are expected to come through in H2. The Group also has favourable forward positions in grain and a strong order book in fertiliser. Some margin pressures remain.
· Outlook for farmgate prices, especially for milk, is more favourable.
· Group remains positioned to deliver a full year performance in line with current market expectations, with a more significant second half weighting than last year.
Steve Ellwood, Executive Chairman of Wynnstay Group plc, said:
“Trading conditions in the first half of the financial year were significantly tougher than in the comparable period last year. The seed planting season was disrupted by persistent rain and wider farmer sentiment was weakened by suppressed farmgate prices and continuing uncertainty over governmental support polices. This was reflected in farm spending and investment patterns.
“We managed trading pressures as effectively as possible and broadly maintained margins across our product categories. We also continued to make progress with our major investment programmes.
“Spring trading over April and May has been ahead of last year and we anticipate more favourable farmgate prices, especially for milk, in the second half of the year. The Group continues to benefit from a strong balance sheet and good cash flow, which will support our investment and growth plans. Our expectations for the full year remain unchanged.”