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:
exceptionally wet weather conditions, which disrupted the seed planting season;
weaker farmer sentiment; and
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)
Adjusted operating profit excludes amortisation of acquired intangibles, share based payment expenses and non-recurring items.
Adjusted profit before taxation excludes amortisation of acquired intangibles, share based payment expenses, non-recurring items and the share of tax incurred by joint ventures.
Net 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):
seed and fertiliser sales significantly impacted by wet weather;
Specialist Agricultural Merchanting Division – revenue of £71.5m (2023: £75.6m), adjusted operating profit1 of £3.3m (2023: £3.4m).
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."
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."
The British Free Range Egg Producer Association (BFREPA) Awards were held on Wednesday, 15th November, in Telford, and a Wynnstay colleague was honoured with the Lifetime Achievement Award.
Two Suitably Qualified Persons (SQPs) from Wynnstay have been recognised for outstanding professionalism and commitment to their training at the National SQP Awards organised by Over the Counter Magazine, which were held in London on Friday 10th November.
On the 2nd of November, the winners of this year’s NFU Cymru/ Wynnstay Sustainable Agriculture award were announced. Clive Swan and family from Ffrith Farm, Mold were presented with the award by Bryn Hughes, Wynnstay National Sheep & Beef Specialist.
Wynnstay is pleased to announce the conclusion of its recruitment process for the role of Group Finance Director, following Paul Robert's decision to retire from the Company after many years of outstanding service, as announced on 3 July 2023. Rob Thomas will be joining the Group on 2 October 2023 as Group Finance Director Designate and as a Director of the Board of Wynnstay. Rob will take up the role of Group Finance Director on 2 January 2024 with Paul Roberts stepping down from the Board on the same day. Paul will remain with the Company in a consultancy role for a period thereafter to assist with the year end audit process and ensure a smooth handover.
Wynnstay is pleased to announce its involvement as a consortium partner in a revolutionary research project into the use of daffodils to reduce cattle methane emissions. The Dancing with Daffodils project aims to transform the efficiency and sustainability of ruminant livestock farming and is supported by the Department of Farming, Environment and Rural Affairs and Innovate UK, the UK's national innovation agency.
Wynnstay is pleased to report the launch of the NFU Cymru/Wynnstay Group Plc Sustainable Agriculture Award 2023, for which it is the joint sponsor.
The Sustainable Agriculture Award celebrates sustainable farmers and farming businesses in Wales, recognising their critical economic, environmental, social, and cultural contribution to society.
Following its acquisition of Humphrey Feeds & Pullets in 2022, Wynnstay has today announced that the two businesses will combine their poultry feed and pullets offering into one focused poultry brand.
