Wynnstay

Animal seed supplier Wynnstay (WNY) has achieved a record interim performance, thanks to huge inflation in raw materials and solid demand over the winter period.

This helped drive sales in the six months to April by 36% to £164.6m as pre-tax profits rose 12% to £3.97m. Wynnstay has successfully diversified its activities, selling to dairy farmers as well as into poultry and sheep farming. Volumes in feed products increased 5% with particular strength in the free range egg market, however higher prices in April hit demand for sheep feed. The recent purchase of grain trading firm Wrekin for up to £4m is expected to be immediately earnings enhancing, and will boost its scale significantly.

In its arable arm Wynnstay has benefited from the acquisition last year of Woodhead seeds, which has boosted cereal sales. Fertiliser demand has proved strong as farmers stocked up ahead of an anticipated hike in prices, due to massive world demand. AIM listed Wynnstay operates a chain of 28 retail stores selling a range of farming products, here like-for-like sales growth was a respectable 7% and a large site has recently been acquired in Shropshire.

It now has 19 'Just for Pets' stores with the intention of opening up to four a year, demand is satisfactory with the well heeled spending more, whereas less well off clients tend to be trading further down. Broker Charles Stanley remains a fan and predicts 2011 pre-tax profits of £6.9m and EPS of 29.8p. We recommended the shares in June last year at 271.5p, after the re-rating we rate Wynnstay as a long-term buy.