Key Points
Financial
- Much softer trading conditions compared to FY22
- farmer sentiment lower, farmgate prices down in important categories of dairy and arable, and the significant one-off gains of FY22 were not repeated (as expected)
- Revenue up 3% to £735.9m (2022: £713.0m)
- full year contributions from two acquisitions and record grain trading volumes, partly offset by the normalisation of fertiliser prices from the unsustainable, historic highs of 2022
- Adjusted operating profit* was £9.30m, including adverse stock realisations as fertiliser raw material prices normalised (2022: £22.4m, including significant one-off fertiliser stock gains)
- Underlying pre-tax profit* of £9.2m, including nominal, non-cash accounting loss of £0.8m (2022: £22.6m, including significant one-off gains) Reported pre-tax profit of £8.7m (2022: £21.1m)
- Basic earnings per share of 30.75p (2022: 82.72p)
- Net cash (excluding property leases) rose to £19.0m (2022: £18.2m)
- Net assets increased to £135.2m (2022: £130.7m)
- 20th consecutive year of dividend increases, with proposed final dividend of 11.75p (2022: 11.60p) – taking total dividend for the year to 17.25p (2022: 17.00p)
Operational
- Agriculture Division – revenue of £584.3m (2022: £564.3m), segmental profit contribution of £3.7m, including one-off adverse Glasson fertiliser stock realisations (2022: £14.7m including significant Glasson fertiliser stock gains)
- Glasson contended with correction in fertiliser raw material prices to more sustainable levels, which created stock losses
- feed volumes decreased by 5.3% on a like-for-like basis, largely reflecting lower demand from dairy and poultry sectors, respectively affected by weaker milk prices and by Avian influenza and margin pressures
- arable activities experienced a very poor seasonally important Q4 with prolonged wet weather significantly disrupting farmers’ post-harvest activities. Grain marketing operation, GrainLink, delivered record performance and fertiliser demand recovered as global prices reduced but margins were pressured
- Higher labour and energy costs impacted margins
- Specialist Agricultural Merchanting Division – revenue of £151.5m (2022: £148.8m), segmental profit contribution of £6.1m (2022: £7.9m)
- footfall and number of transactions were in line with prior year, but like-for-like sales decreased as lower farmer sentiment affected spending patterns, with higher margin bagged feed and hardware sales down
- 2022 acquisitions, Humphrey Feeds and Tamar Milling, were fully integrated
- full benefits still to come
- First phase of investment at Carmarthen feed mill was completed, with other investments also progressing well, including installation of solar arrays
Outlook
- Market conditions expected to remain challenging in the short-term
- Strong balance sheet and good cash generation leaves Group well-placed to continue with its strategic growth plans and to consider suitable acquisition opportunities
*Underlying pre-tax profit is a non-GAAP (generally accepted accounting principles) measure and is not intended as a substitute for GAAP measures and may not be calculated in the same way as those used by other companies. Refer to Note 14 for an explanation on how this measure has been calculated and the reasons for its use.
Gareth Davies, Chief Executive of Wynnstay Group plc, commented:
“Last year’s results were exceptional, setting record highs driven by substantial one-off gains, especially from soaring global fertiliser prices. Strong farmgate prices and farmer confidence also helped to create a strong market backdrop last year for the Group.
“This year’s results were generated against much softer trading conditions, with weaker farmer sentiment, particularly dairy and arable farmers, higher labour and energy costs, and a weak final quarter for arable as a result of the prolonged wet weather. As we expected, the one-off gains of 2022 did not repeat and our fertiliser activities contended with the reversal of fertiliser raw materials prices, which created one-off stock losses.
“Nonetheless, we made progress with the Group’s investment plans and completed the integration of our two acquisitions, Humphrey Feeds and Tamar Milling. The full strategic benefits of these acquisitions are still to come through. We are also delighted to highlight our twentieth year of annual dividend growth, with our proposed final dividend.
“Trading conditions are anticipated to remain challenging in the short-term. However, the Group’s strong balance sheet and good cash flows leave us well-placed to continue with our growth plans and to consider suitable acquisitions.”