Agricultural supplies company Wynnstay said it saw good performances from its three core divisions in the first half, despite challenging trading conditions.
The group, which has a seeds processing facility in Shrewsbury, saw pretax profit rise to £1.99 million from £1.83 million in 2004.
Turnover fell to £55.01 million from £58.52 million, which the company attributed to deflationary factors, particularly in the feeds business and its decision to relinquish business which it did not feel offered appropriate returns.
Despite a small fall in volumes in its feeds division, Wynnstay said improved margins and more stable pricing due to better harvest conditions contributed to a good overall performance.
The reduction in volume was mainly accounted for by reduced demand from the beef feed sector, which in turn reflected changes in support payments for beef farmers from the EU, the company said.
In its arable division the company saw cereal seeds sales improve over the same period last year in what proved to be a long planting season as a result of the inclement spring weather.
The company's grain trading arm, Shropshire Grain, improved volume by about ten per cent, although selling prices were lower, Wynnstay said.
Wynnstay said its stores division was a strong performer with improved overall margins.
Work has commenced on a new store at Newtown, Powys, which will be completed in September, and it had receive planning permission for a new store at its headquarters in Llansantffraid, the company said.
Managing director Bernard Harris said trading in the arable and feeds divisions had been made difficult by a combination of mild weather and changes in farmers' buying patterns as a result of Common Agricultural Policy reform.
However, he added that Wynnstay had successfully diversified its product base, benefiting from the successful integration of eight stores acquired through the purchase of the Eifionydd Farmers Association.
The company is also ready to start production at its new equine feed production plant in Standon, Staffordshire.
The factory is part of a joint project with Cheshire-based Youngs Animal Feeds.
Wynnstay, which employs approximately 420 core staff on sites across the border counties and Wales, was also hit by rising fuel prices.