Wynnstay Group Plc · LSE:WYN
Wynnstay — H1 2024 Earnings Presentation
24 slides from Wynnstay's earnings presentation, Jun 25, 2024
Slide 1: Wynnstay Group plc Interim Results
Wynnstay Group plc Interim Results For the half year ending 30 April 2024 25 June 2024
Slide 2: Presentation team
Presentation team Steve Ellwood, Executive Chairman • Joined the Board in April 2016, becoming Chairman in April 2020. • Extensive experience within the UK agriculture and agri-food sectors: o Formerly Head of Agriculture at HSBC Bank plc and Head of Food and Agriculture at Smith & Williamson LLP; o
Slide 3: H1 Overview
H1 Overview • Challenging trading conditions created by: Resilient performance in a o exceptionally wet weather conditions much tougher environment o weaker farmer sentiment o falling commodity prices STRATEGIC • Higher labour, distribution and packaging costs mostly offset Unit margins broadly PROG
Slide 4: Business summary
Business summary Helping farmers feed the UK in a more sustainable way Comprehensive range of agricultural products, supported by expert advice Specialist Agricultural Agriculture Merchanting H1 Revenue: £257.0m (2023: £333.5m) H1 Revenue: £71.5m (2023: 75.6m H1 Operating Profit: £1.3m (2023: £2.3m)
Slide 5: H1 Financial highlights
H1 Financial highlights Revenue (£m) Gross Profit (£m) 409.1 41.7 40.2 • Revenue of £328.5m (2023: £409.1m) 335.7 328.5 32.3 33.3 o 86% (£69.0m) of the decrease was due to 31.5 commodity price deflation 249.7 229.3 • Gross profit of £40.2m (2023: £41.7m) o reflected lower activity, with unit margins
Slide 6: H1 Income statement
H1 Income statement • Revenue of £328.5m (2023: £409.1m) with the reduction driven by £000s Apr-24 Apr-23 6 months 6 months commodity price deflation, which accounted for c. £69.0m (86%) of Revenue the decrease Agriculture 257,001 333,569 Specialist Merchanting 71,489 75,570 • Gross profit down slig
Slide 7: Balance sheet at 30 April
Balance sheet at 30 April £000s Apr-24 Apr-23 Non-current assets • Reduced working capital reflects commodity price deflation Intangible assets 25,162 25,142 Fixed assets 25,874 24,578 Right of use assets 14,559 10,015 • Cash working capital reduction of £23.8m Other non-current assets 101 - 65,696
Slide 8: H1 Cash flow
H1 Cash flow £000s Apr-24 Apr-23 6 months 6 months • First half represents peak Group working capital Adjusted operating profit 4,662 5,775 requirements Depreciation and amortisation 3,140 3,187 Profit on disposal of fixed assets (134) (31) o reflects position as producer, carrying forward-bought Wo
Slide 9: Net cash summary
Net cash summary Net cash / (debt) • £25.8m of cash generated in last 12 months • Committed facilities of £20.5m to May 2026, with further accordion facility of £5.0m if required • Substantial cash and facility headroom – working capital requirements and investment plans are very well supported 30.0
Slide 10: Capital allocation framework
Capital allocation framework Framework Status STRATEGIC • PROGRESS Undertaking projects to improve efficiencies, increase capacity and expand capabilities Continued internal investment for • Projects that reduce carbon output and provide an acceptable ROI are being actively organic growth and better
Slide 11: Feed
Feed Agriculture Division Continued investment in operations • Feed volumes down 2.3%: in line with national trend • Demand from dairy farmers was affected by weaker milk prices • Phase 1 of Carmarthen feed mill completed, adding capacity and efficiency. • Appraising options for poultry feed manufac
Slide 12: Arable
Arable Agriculture Division Significantly impacted by wet weather • Prolonged wet weather disrupted the planting season o damaged sown crops and delayed spring plantings o delayed fertiliser applications • Estimate the arable season was delayed by 4 weeks o some sales will come through in H2 • Expec
Slide 13: Glasson
Glasson Agriculture Division Deflationary trading environment • Further deflation in fertiliser prices put pressure on margins in the first quarter • Margins recovered in Q2 • Spring season sales were significantly delayed by the wet weather. • Consolidation of fertiliser blending activity at Howden
Slide 14: Depots
Depots Specialist Agricultural Merchanting Division Resilient performance • Total revenue across depot network was 5.4% lower o most of this was deflation o adjusting for deflation, sales were only 0.8% down y-o-y • Inflation-driven overhead increases managed effectively • Evolution of operating mod
Slide 15: Environmental sustainability
Environmental sustainability Helping farmers to feed the UK in a more sustainable way Customer focus • Supporting farmers’ environmental transition • Environmental product offering is expanding • Expertise advice – including ‘on-farm’ advisors and online advice • Farmer events – Arable Event, Sheep
Slide 16: Environmental sustainability
Environmental sustainability Committed to achieving net zero carbon emissions by 2040 Investment in renewables: solar installation project • Significant multi-million pound investment programme over next three to five years with good return on capital employed • Phase 1 completed in FY23: o investme
Slide 17: Wynnstay strategy
Wynnstay strategy Helping farmers feed the UK in a more sustainable way Committed to agriculture in Great Britain Expert Multi-channel Acquisitions ESG Organic guidance vision Growth Strategic pillars Organic M&A Approach to growth Trusted experts Product range Manufacturing capability Multi-channel
Slide 18: Summary and outlook
Summary and outlook • Resilient underlying trading against a more challenging trading environment • Strong balance sheet and cash flows support: o organic and inorganic growth o working capital requirements o dividend policy • Continued investment is driving margin, increasing manufacturing capacity
Slide 19: Q&A
Q&A Steve Ellwood, Executive Chairman Rob Thomas, Group Finance Director 19
Slide 20: Supplementary information
Supplementary information • Geographic Reach • Acquisitions • Market Trends 20
Slide 21: Geographic reach
Geographic reach 12 manufacturing sites 53 depots c.105 vehicles c.944 employees 21
Slide 22: Acquisitions (2015-2024)
Acquisitions (2015-2024) Date Acquisition Business Type Feed Arable Depots ✓ Nov 2022 Tamar Milling Limited Feed manufacturer & supplier ✓ Mar 2022 Humphrey Feeds and Pullets Ltd Poultry feed manufacturer and supplier Fertiliser manufacturing business ✓ Mar 2021 Blended-fertiliser manufacturer & ass
Slide 23: Market trends
Market trends Wheat price (£/T) UK Nitrogen Fertiliser price (£/T) Egg price pence per dozen 160 350 1000 Price - pence per dozen Enriched 140 900 300 Price - pence per dozen 'Free-range' 800 120 250 700 100 600 200 80 500 150 400 60 300 100 40 200 50 100 20 0 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 24: Market trends
Market trends Milk price (pence per litre) Finished Lamb price live weight (pence per kilogram) Finished Steer price live weight (pence per kilogram) 500 350 60.00 450 300 50.00 400 350 250 40.00 300 200 30.00 250 150 200 20.00 150 100 100 10.00 50 50 0.00 0 0 Mar-21 Jul-22 Jul-23 Jul-21 Mar-22 Mar-