Companies: WYN   

Commencement of the EU Single Farm Subsidy Payment twinned with rising fuel and power prices halted agricultural supply business Wynnstay’s profits growth for the first time in five years.

Wales-based Wynnstay suffered a drop in pre-tax profits to £2.53m (£2.87m) for the year to October, from continuing turnover of £102m (£101m). Chief executive Bernard Harris said the dip reflected flagging fertiliser sales and energy costs that hit ten-year highs.

Given the backdrop, the figures were ‘creditable’, demonstrating the strengths of diversification. Despite tricky trading conditions for the feeds and arable divisions, management continued to invest in stores and manufacturing capability. December 2005 acquisition Quins Farm Supplies was successfully integrated and Wynnstay is shortly to launch its first stand-alone pet store under the ‘Just For Pets’ brand in Telford – plans are afoot for two more pilot stores this year.

Last August, Wynnstay completed its largest-ever acquisition, buying Glasson for £2.4m in a transaction boosting all three divisions and that should enhance earnings this year, from forecast Glasson sales of £38m. Admittedly, profits retreated in 2006, yet Wynnstay remained resiliently profitable, its property development business had a strong year and the group remains a steady business with not insubstantial income appeal (the dividend was increased 5% to 5.25p).

This year, analysts are looking for improved profits of £3.1m and 17.6p of earnings, placing the shares on a forward p/e of less than 14. In our view, net assets of 244p underpin the valuation, with positive market and growth prospects an additional bonus. If you already own shares, consider adding to your holding. Add.

Wynnstay Group	AIM	£28.18m	196.00p	-4.00p
Click here for interactive charting
Other company articles:
Expansion at Wynnstay			08/08/2008
Wynnstay veteran goes			21/02/2008
Wynnstay Group			07/01/2008
Wynnstay Group			22/06/2007
Wynnstay Group			24/01/2007