Turbulence in agriculture hits NWF profits

NWF, the Cheshire distribution company said it had produced “solid” half year results despite  turbulent market conditions in its agricultural feeds division.

In the six months to the end of November profits at the Wardle-based group fell from £3.3m to £2.5m as revenues dropped 4.6% to £247.1m.

It was not all glum reading as the group held its dividend at 1p per share and said it had reduced debt from £16.8m to £12.4m despite investing in a new feed facility in Dumfries and a fuel depot and Mansfield.

The AIM-listed company said sharp commodity price falls had hit margins in feeds hard as a result of using higher-priced, forward bought commodities as prices were reduced. Operating profits in the division slumped from £1.4m last year to £100,000.

NWF’s food distribution business Boughey had a strong half year. Revenue increased by 1.6% to £18.8m as the business operated with a consistent customer base from the Wardle site. Operating profit was £1.5m, £400,000 up on the previous year, an increase delivered by a more efficient operation which did not require trunking and cross docking which had been required when the group had leased a second site on Deeside.

In its fuels division, which distributes heating oil to households and businesses which are not on the mains, revenue decreased by 6.9% to £160.3m as a consequence of the fall in oil prices. Operating profit was £1.2m (H1 2013: £1.1 million), as the business successfully offset the lower demand for heating oil, due to the milder weather, with increased sales of gas oil and premium products.

Looking ahead chairman Mark Hudson said: “We have performed as planned since the period end. In Feeds our customers are facing further falls in milk prices and we are working to optimise diets to help mitigate the tough conditions for dairy farmers. In the Food division, we have navigated the volatile Christmas period and are continuing to focus on improving operating efficiency and utilisation of our site and vehicles.

“In Fuels the oil price has fallen further which has not impacted profitability and we have seen a return to more normal seasonal weather conditions. Overall the group is trading in line with the expectations.”

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