Wynnstay

Animal feed manufacturer Wynnstay (WNY) has reported a record trading performance for the year to October, and is rewarding shareholders with a 10% hike in its total dividend to 7.8p a share.

Against a backdrop of inflation in all agricultural commodities, the AIM company hoisted sales 42% to £346m, as pre-tax profits increased 17% to £6.9m. The star of the show was its largest division, the agricultural arm – here revenues jumped 54% to £274.6m, driven by the recent acquisitions of grain marketing operation Wrekin Grain and a full-year conbtribution from Woodheads Seeds. Feed volumes rose but it was the inflation effect that really helped.

Despite well-known retail woes, the specialist retail arm achieved a 9% hike in sales to £71.3m, with the country stores benefiting from store refurbishment and good non-discretionary spend. The store opening programme has helped its Just for Pets stores, which now trades from 19 outlets – small pet clinics are also being rolled out.

Speaking to Growth Company Investor, chief executive Ken Greetham said, 'We have enjoyed the benefits of operating a broad-based business, and view the future with confidence.' Wynnstay is on the lookout for complementary acquisitions, but is in no rush thanks to the considerable organic growth opportunities available.

There is a concern that the supermarkets will continue to hit farmers by driving down prices of essential items such as milk and bread, but Wynnstay remains positive about the long-term outlook. House broker Shore Capital forecasts 2012 pre-tax profits of £7.3m and EPS of 31.9p. Backed by a solid balance sheet, we rate Wynnstay as a long-term buy.