The Wynnstay Group has reported “significantly improved” farm supplies and rural retail trading in 2017. There was a 10.5% increase in full year sales and 9% rise in underlying profitability, although the latter is reduced by the loss of the Group’s Just for Pets business last year.
The business has reported an underlying pre-tax profit from continuing operations of £7.97 million on revenues from continuing operations of £390.7m in the year ended October 31st 2018, compared to the restated £7.3m and £353.73m from 2016. But the decision to place the Just for Pets chain of stores into administration in October last year reduced the reported Group pre-tax profit to £1.15m.
Wynnstay’s Agricultural Division made an operating profit of £3.34m on sales of £280.87m, compared to £3.01m and £249.74m a year earlier. Chief executive Ken Greetham states that improving farmgate prices over the year lifted demand for most inputs, particularly dairy feed, which had suffered from reduced demand in the previous twelve months. The company makes compounds and blends for both ruminant and non-ruminant species, as well as supplying straights.
“The strong upturn in feed demand year-on-year provides us with confidence for sales over the winter period,” he states. “The increased volume of UK milk gives rise to some concern over milk prices, which have peaked at around 30p/litre, with possibility of a slight reduction. With a generally stable UK and world market, we believe that this is likely to be short-term, and we do not expect to see a repeat of the reduction in prices experienced in 2015. We remain encouraged about the level of demand for livestock feed in the current year.”
The company says demand for its bagged feed products, mainly sold through the Group’s retail store network, increased during the year. This was helped by its investment in a new bagging facility – “the supply of bagged feeds brings further predictability and stability to production”.
The Group’s arable business suffered from the low grain volumes from the small 2016 harvest, which pressured margins in a competitive market, followed by farmer reticence to sell grain from the larger 2017 crop. This contributed to the lower volume handled by the GrainLink marketing business in the period. Farm grain stocks are currently high, and will need to be traded before the 2018 harvest.
On the inputs side, sales of cereal and herbage seeds were in line with the record volumes supplied the year before. Fertiliser demand was strong over the spring and summer, but the higher autumn prices deterred early orders, so the company predicts a stronger spot market for spring 2018. The FertLink joint venture with NW Trading improved its performance in line with the wider recovery in fertiliser volumes.
Glasson Grain, the Group’s Lancashire-based feed materials and fertiliser wholesaling operation, saw lower demand for feed materials offset by a significant increase in fertiliser sales through increased market penetration in the north of England and Scotland. Its contribution was in line with the previous year.
The Wynnstay Stores retail chain throughout Wales and the west of England returned a pre-tax profit of £4.74m on sales of £109.7m, from the £4.47m and £103.86m the year before.
Like-for-like sales rose by 5%, driven largely by improved livestock returns, with strong demand for animal health products, milk powders and livestock hardware products. The Youngs Animal Feeds operation, which specialises in feed products for equines and small animals, is being reorganised.
The Wynnstay Agricentre business, acquired in October 2015, and based in the south west of the UK, has been refocused to raise the efficiency of its delivery network, with the closure of two of the original eight outlets. Improvements to customer service processes and investment in personnel is expected to lift sales in the region.
The Group invested £550,000 just after the year-end in acquiring the former Bunn fertiliser blending facility at Montrose from Origin Fertilisers. Mr Greetham says the move will help its Glasson business increase its share in the UK fertiliser market and expand into Scotland. Wynnstay is also planning to invest in its two feed mills and the seed production plant at Astley in Shropshire to improve production efficiency and expand capacity.
On the Retail side, the Craven Arms outlet in Shropshire was refurbished and the store at Ruthin in Denbighshire relocated. The ongoing refurbishment of retail outlets will continue, and the Group intends to further expand its geographic presence.
“The recovery of farm output prices last year drove a greater sense of optimism across the agricultural sector, which is reflected in the success of our core trading business over the past 12 months,” says Mr Greetham. “Our 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 agricultural trading backdrop is stronger than this time last year and the new financial year has started in-line with management expectations. We believe the business remains well-placed to develop and grow. While Brexit creates some uncertainties, we remain confident of our market positioning.
“As we embark on our centenary year, we plan to continue to invest in the Group’s infrastructure, particularly focusing on manufacturing and logistics, which will improve the Group’s efficiency and yield broader benefits in the medium to long-term,” Mr Greetham concludes.