Failure of Just for Pets punches hole in Wynnstay profits
Agricultural group Wynnstay has seen a return to strong profit growth at its core business, but took a heavy hit from the collapse of its pet products business Just for Pets last year.
The pet business was put into administration in October and associated costs of £6.59 million saw the group report a loss after tax of £280,000, compared to 2016's £5.8m profit.
But 'significantly improved trading' for its agricultural opertaions, incluidng a rise in farm output prices - including milk – saw Wynnstay's turnover from continuing operations rise 10.5 per cent to £390.72m.
And pre-tax profits from continuing operation at the Llansantffraid and Shrewsbury-based group rose 9.2 per cent to £7.97m.
The agricultural division saw its operating profit rise 11 per cent to £3.34m on revenue of £280.9m with a recovery in trading conditions for both livestock and arable farmers.
Wynnstay also sold more dairy feed and fertiliser, while it has investment plans in place for this year to increase capacity in feeds and seeds.
Ken Greetham, chief executive of Wynnstay, said: "Our core agricultural business delivered a significantly improved performance year-on-year, reflecting better trading conditions for our farmer customers, with milk and other farm output prices recovering from the depressed levels of the last two years. The recovery in prices over 2017 drove a greater sense of optimism across the agricultural sector.
"The group's results as a whole were impacted by Just for Pets, which was very regrettably placed into administration in early October. However, this decisive action helped to minimise the potential adverse effect on both creditors and employees, preserving most jobs.
"The agricultural trading backdrop is stronger than this time last year and the new financial year has started in line with management expectations. We continue to invest in the Group's infrastructure, focusing on manufacturing and logistics, and believe that the business remains well-placed to develop and grow. While Brexit creates some uncertainties, we remain confident of the Group's market positioning.
"2018 is our centenary year and we look forward to marking it with a number of events and initiatives for all staff, customers and other stakeholders."
In its full year report today, Wynnstay said: "A key feature of the year was the improvement in the trading backdrop, with market prices for agricultural outputs recovering over the year. For many farmers, particularly in the dairy sector, output prices had previously fallen to below the cost of production. The recovery in prices over the period, therefore, lifted sentiment across the sector, driving an upturn in demand for most agricultural inputs, including feeds.
"The most marked improvements in output prices were in the livestock sector, particularly dairy, where milk prices increased sharply over the last 12 months, although they did not reach the levels seen in 2013. We remain encouraged about the level of demand for livestock feed in the current year."
Meanwhile, seed sales were in line with last year's record levels and overall fertiliser sales were higher year-on-year.
"Sales from the network of Wynnstay Stores increased as farmers invested in their enterprises, with a significant improvement in hardware, supplements and animal health products.
Reflecting the recovery in the performance of its continuing operations, Wynnstay proposes to increase the final dividend payout to shareholders to 8.4p a share, up from 8p last year. This brings the total dividend payment for the year to 12.6p, up five per cent on 2016.
