Agricultural supply firm Wynnstay warns over profits
Agricultural group Wynnstay has warned investors that its profits are set to tumble when it delivers results for the first half of the year, after struggles in its pet supply arm.
The Shrewsbury and Llansantffraid company said its overall strong performance had been dragged backwards by pet products retailer Just For Pets as it delivered a trading update for the six months to April 30.
Excluding the pet food brand, the company is to announce strong results for the first half when it delivers half-year results on June 21.
But Just For Pets has underperformed, making a loss during the first half of the year, leading the company as a whole to prepare for a fall in profits.
The London Stock Exchange-listed company saw its shares tumble by six per cent as the market opened on Wednesday morning, and by lunchtime they were 7.36 per cent down at 579p.
With the pet supplies retailer, which includes stores in Wellington and Ketley, being a smaller part of the business, the company said it was now "reviewing its options" for the division.
Wynnstay is to announce restructuring plans for Just For Pets in the second half of the year.
The seed and feed company saw profits fall 12 per cent to £7.29 million in the last full financial year.
The company said in its statement to the market: "Just for Pets has continued to experience subdued demand, reflecting general retail trends in the sector, and certain stores in particular have not delivered the expected performance, resulting in losses in this activity during the first half.
"As a consequence, the board now expects to book a non-cash goodwill impairment charge for the period although the level of this charge is yet to be finalised.
"This will result in the company's reported profits for the first half of the financial year being materially lower than for the same period last year. The company's adjusted profit before tax before the goodwill impairment charge for this period will be marginally below last year, impacted by the Just for Pets performance."
The update also saw the company deliver a more positive assessment of the farming industry, adding that trading conditions for farmers have improved slightly during the period – although the sector remains challenging.
"Trading headwinds for farmers have eased somewhat but the agricultural environment remains challenging, with margin pressures a feature," the company said in its statement.
