Wynnstay Group reported record demand for spring seed among
UK farmers kept from autumn plantings by poor weather, which also lifted demand
for the company's feed products but is undermining grain trading volumes.
The fertilizer-to-wild bird feed group, whose shares have
represented among London's better performers over the past year, said that its
seed sales had "remained resilient despite the effect of the adverse weather".
Persistent rain last year landed UK growers with their worst
wheat harvest in a generation, and forced them to leave unplanted tracts of
land due for autumn sowing.
While difficult field conditions "have restricted
cultivation opportunities", many farmers "will resort to spring varieties if
conditions do not improve", Wynnstay chief executive Ken Greetham said,
speaking as the UK window for even late-planting of winter crops is closing.
"Demand for these [spring seed] products is at record
levels, and we anticipate a good spring season."
'Feed demand strong'
The comments follow cautions from the likes of the UK's HGCA's
crop bureau that supplies of some popular spring seeds, such as barley, may
struggle to cope with demand, given the extent of land remaining unsown, and
now earmarked for spring planting.
And they highlighted just one of the impacts on groups such
as Wynnstay from the dismal agricultural conditions.
The group, which said its agriculture division overall "performed
extremely well" in the year to the end of October, also reported a boost to its
feed demand from livestock farmers struggling with underperforming pasture.
"Demand for feed was strong in the second half [of Wynnstay's
financial year], reversing the trend in the first half, as farmers relied on purchased
feeds to balance the poor grazing conditions," Mr Greetham said.
Wynnstay's like-for-like feed volumes for the year overall
rose by 2%, with margins higher too.
However, the "buoyant" feed demand contrasted with "subdued"
conditions in the fertilizer market.
"Demand for fertiliser was subdued in the second half, in
line with industry trends, as poor weather conditions reduced usage on
grassland crops," Mr Greetham said, adding that the group's own nutrient sales
"The inclement weather and poor harvest conditions tempered
customers' confidence to purchase ahead of anticipated usage."
And the impact has lingered. "Currently, forward orders for spring usage
are lower than normal as customers have been reluctant to commit to early
Furthermore, while grain volumes soared 35% over the year as
a whole, boosted by the formation of the GrainLink trading operation, backed by
the acquisition of Wrekin Grain, the poor 2012 crops "had a small effect on
traded volumes towards the year end," Mr Greetham said.
"We expect a further reduction in volume through to the 2013
harvest. We are not expecting volumes of traded grain to be buoyant."
Nonetheless, he said he was "confident" about the groups
prospects for the new financial year, which had "started well", and was placed
to see a recovery in demand for fertilizer.
For the year to the end of October, the group reported pre-tax
profits up 12.7% at £7.82m, on an 8.6% rise to £375.8m in revenues.
The increase was led by the agriculture operations, where operating
profits soared 23% to £4.71m.
Analysts at Shore Capital termed the results "excellent", saying Wynnstay's profits had exceeded forecasts "despite a particularly challenging year in the world of UK agriculture.
"The ongoing strategy of management of creating a business with a high level of diversification across its revenue streams has once again paid off."
Wynnstay shares gained 0.7% to end at 475p in
London, below an intraday top of 482p, but nonetheless a fresh record closing high.