Wynnstay profits hit by warm weather and cautious farmer spending
Agricultural group Wynnstay blamed an unusually warm winter and more cautious farmer spending for its fall in first-half profit.
The firm, which has operations in Llansantffraid and near Shrewsbury, saw pre-tax profit for the six months to April 30 fall to £4.1 million, down from £4.9m the previous year.
The fall came despite revenue rising to £260.6m, up from £218.5m, thanks to higher commodity prices.
Wynnstay said the abnormally warm winter had reduced demand for feed and feed-related products. Farmer spending, meanwhile, was affected by lower farmgate prices and Brexit uncertainty.
The group said sales were up in its agriculture division, from £160.1m to £195m, but operating profit fell from £2m to £1.7m.
Meanwhile, in its specialist agricultural merchanting division revenue was up from £58.2m to £65.4mn, while operating profit fell from £3.1m to £2.6m.
Wynnstay said sales benefited from its expanded depot network, while the acquisition of Stanton Farm Supplies in April strengthened its trading presence in the south west.
Gareth Davies, chief executive of Wynnstay, said: "The combination of abnormally warm weather, which reduced feed demand during traditionally important months, and more cautious spending patterns by farmers in reaction to a softening in farmgate prices and Brexit uncertainties, created challenges for the agricultural supplies sector. Wynnstay's results reflect this.
"We continued investing in our manufacturing and production plants, and have also expanded our farming customer base, strengthening our presence in the south west with an acquisition.
"Wynnstay's long-term prospects within the industry remain strong, and at this stage of the financial year, the board's expectations for the full year outcome remain unchanged."
Financial director Paul Roberts said the half year results were a step away from last year's record performance.
Early grass growth this year had meant animals were turned out much earlier and that had had an impact on volume seed sales.
Mr Roberts said Wynnstay was fairly pleased with the robust performance of its activities in the half year and the early spring had generated increased activity in arable areas.
He said uncertainty over Brexit had also led to a degree of belt tightening particularly in the sheep sector.
"There was clear concern over whether the EU market was going to continue to be available before March 28.
"That uncertainty has had an impact on this set of results," he explained.
Mr Davies said Brexit was stifling investment across farming.
"People will grow and increase the size of their business in due course, but investment is being put on hold while people await a clear idea of what Brexit actually means."
Mr Davies stressed that Wynnstay was continuing to invest and had spent £1.5m on its Astley arable centre at Shrewsbury on improving distribution and storage.
"It will help improve distribution to our depot network and has enhanced our seed processing operation.
"We are also continually investing in our seed manufacturing plants to make them more efficient," he explained.
Wynnstay now employs 950 across its operation which includes processing plants from Montrose in Scotland to Carmarthen in West Wales and 56 farm outlet depots across the west side of the country.