The Wynnstay Group has posted record full year profitability and revenue figures, with strong growth from both its agricultural merchanting and rural retailing divisions. It says strong farmgate prices and returning confidence drove higher farm investment in the period, with revenues lifted by more normal arable trading levels and a windfall from sharply increased fertiliser values in the second half.
The Group has reported an operating profit of £10.61 million on revenues of £500.39m in the year ended October 31st 2021, compared to £6.82m and £431.40m in the previous year. On an adjusted basis, operating profit is £11.09m (£8.14m). Net assets rose 8% to £105.72m (£98.18m twelve months earlier).
The Agriculture Division made an operating profit of £4.22m from revenues of £358.96m, up from £2.88m and £302.58m previously – respective increases of 47% and 19%.
Total feed volumes were up by 6.5%, although higher production and distribution costs kept operating profit at previous year levels. The business increased dairy and free-range layer volumes and ins seeking to use more sustainable feed ingredients and reduced plastic in packaging to meet customer demand.
The headquarters feed mill at Llansantffraid achieved record production during the year and Wynnstay plans to accelerate its Carmarthen mill investment programme. It expects feed demand to remain strong over the winter as forage supplies, although abundant are of varying quality, while strong milk prices will support feed demand. But it warns of continued margin pressure from very volatile feed material markets and higher energy, fuel and labour costs.
Wynnstay’s arable marketing businesses benefited from the more normal 2021 harvest volume after 2020’s 40 year low, combined with good autumn 2021 planting conditions.
The Glasson feed material wholesaling and fertiliser blending operation had a particularly strong year with rising commodity prices – especially the three-fold rise in fertiliser raw material prices in the second half. A second half restructuring of Glasson’s operations saw non-core activities, such as stevedoring, discontinued with Glasson now wholly concentrated on growing its core fertiliser and feed ingredient activities.
Wynnstay’s Specialist Agricultural Merchanting Division – its chain of 54 farm stores – made an operating profit of £7.15m on revenues of £141.43m (£5.78m and £128.81m in the prior year) increases of 24% and 10%.
There were strong sales across all major retail product categories, including bagged feed, hardware, and animal health, reflecting increased farmer confidence and expenditure.
The Group made two bolt-on acquisitions during the second half – the trade and certain assets of Armstrong Richardson’s agricultural division for £548,000 and the HELM GB fertiliser business for £1.66m – have integrated well and expanded Wynnstay’s customer base and trading area.
The Group launched a new digital trading portal in the first half and reports steady adoption by customers. It is also investing in further manufacturing and processing capacity – in addition to the Carmarthen feed mill it will extend its Astley seed processing facility. It has also formed a trading partnership with Caplor Energy to provide renewable alternative energy systems and storage on farms.
“These record results reflect the significantly improved trading environment as well as our initiatives to drive growth, productivity and efficiency,” says Wynnstay Group chief executive Gareth Davies. “Strong farmgate prices and the lifting of uncertainties around Brexit and future financial support have promoted a return to farm investment.
“Results also benefited from a strong second half across the Group, especially for our arable operations. The 2021 harvest was good, with tonnages and yields reverting to more normal levels, and our fertiliser blending activities generated a windfall gain in a highly disrupted marketplace.
“Trading in the new financial year has begun well, in line with our expectations. We have a clear growth plan with strategic investment programmes under way, and new opportunities. While there are challenges with rising costs, we are confident that Wynnstay is well-positioned to achieve its growth objectives for the year, and view prospects for continuing development very positively,” Mr Davies concludes.