Shares in Wynnstay tumbled 5% after the grain trading-to-fertilizer
group warned that the warm UK winter would prompt a drop in first-half profits,
in stemming the need by livestock farmers to rely on bought-in feed.
The group, which also owns the Just for Pets group, said
that a winter which, while unusually wet, proved "exceptionally mild" had "shortened
the housing period for livestock, reducing feed demand".
With its grain trading operations feeling the impact of a
small UK grains harvest last year, when wheat production fell to a 12-year low
of 11.9m tonnes, the group warned its results for the six months to the end of
April were "expected to be behind the record level of the prior year".
"The current year has experienced a more challenging start,"
The group added that a strong autumn sowing season, in
boosting demand for fertilizers and auguring well for this year's grains
harvest, boded well for futures results.
"Current market conditions are encouraging for the second
half of the year," Wynnstay said.
However, the comment failed to reassure some investors who
had hoped for more from boosts from factors such as strong milk prices, which
has underpinned dairy demand for inputs.
In January, Ken Greethan, the Wynnstay chief executive, said
that while "mild winter conditions have tempered demand for feed and raw
materials… the broad base of the business traditionally provides a buffer to varied
Broker Shore Capital cut its hopes for Wynnstay's underlying
pre-tax profits for the full financial year by £500,000 to £8.5m – flat with
those last year.
The forecast for underlying earnings per share was cut by 2.1p
to 34.3m, implying a 6% fall year on year.
"Taking into account the softer than expected demand seen so
far during the current year, we believe it is prudent to roll this out into our
full year expectations," Shore Capital analyst Phil Carroll said.
"Whilst feed might be expected to be sold just out of the agriculture
division, it is not the case, with Wynnstay's country stores also selling a
reasonable proportion of feeds, especially when the adverse weather impacted
bulk feed distribution."
Wynnstay shares fell to 640p in early deals in London,
before recovering some ground to stand at 647.75p in lunchtime deals, down 4.5%
on the day.