Wynnstay Group Unveils Mixed Full-Year Results and Launches Transformation Program
Why we think this is neutral
Wynnstay Group's full-year results present a mixed picture. While revenue and profits declined due to challenging market conditions and commodity deflation, the company maintained a strong balance sheet and increased its dividend. The launch of Project Genesis, a three-year transformation program, signals management's proactive approach to addressing challenges. However, the effectiveness of this initiative remains to be seen. The agricultural sector continues to face headwinds from weather conditions and changing governmental support policies, creating uncertainty. Despite these challenges, the company expects improved performance in FY25, though this outlook is tempered by ongoing market uncertainties. The maintenance of a strong cash position and dividend increase demonstrate financial resilience, but the significant decline in key financial metrics cannot be overlooked.
Key Points
- Revenue decreased to £613.1m (2023: £735.9m) due to commodity deflation
- Adjusted operating profit down 23% to £7.9m (2023: £10.2m)
- Final dividend increased to 11.90p (2023: 11.75p)
- Net cash position improved to £32.8m (2023: £23.7m)
- Launch of Project Genesis, a three-year transformation program
- Depot Merchanting segment showed improved performance
- Feed and Grain segment faced significant challenges
- Non-recurring items of £2.3m related to business reorganization and asset impairment
- Expectation of stronger performance in FY25
- Challenging market conditions, including adverse weather impacts
Summary
Wynnstay Group PLC reported full-year results for FY2024, showing a revenue decrease to £613.1m from £735.9m in 2023, primarily due to commodity deflation. Adjusted operating profit fell 23% to £7.9m. Despite challenges, the company maintained a strong balance sheet with net cash of £32.8m and proposed a final dividend increase to 11.90p. The company launched Project Genesis, a three-year transformation program aimed at establishing a more efficient operating model. The Depot Merchanting segment showed improved performance, while Feed and Grain faced significant challenges. Management expects a stronger performance in FY25, helped by operational improvements. Broker Canaccord Genuity maintains a "Buy" recommendation with a 470.00p target, significantly above the current share price of 284.00p.