PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 14:18 UK, 18th Mar 2014, by Agrimoney.com
Mild UK winter dampens Wynnstay's profit hopes

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," Wynnstay said.

'Encouraging' outlook

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 market conditions".

Estimate downgrade

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.

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