NWF Group posts record interim results, despite turbulent trading conditions

Nantwich-based food, feed and fuel distributor, NWF Group, has posted record first half results, with a good performance from all three divisions.

During the six months to November 30, 2022, the group achieved a 34.6% increase in revenues of £541.8m. Pre-tax profits off £5.9m were compared with a pre-tax loss of £4.4m the previous year.

Net debt was reduced by 17.6% to £30m. The group held net cash of £1.2m at the period end, which was an improvement on a net debt of £7.4m in the previous period.

The 1p per share interim dividend is maintained.

All divisions traded ahead of the board’s expectations at the end of the first half, continuing to demonstrate the resilience of the group, the board said.

It has a strong financial position, with a positive cash position at the end of the half year supporting the £10m acquisition of Sweetfuels in December 2022, and a maintained dividend.

The group has traded well since the period end and carries encouraging momentum into the seasonally busier second half, with the board confident in delivering its full year expectations.

The Fuels division achieved a headline operating profit of £2.6m (H1 2021: £3.6m). It posted a good performance in the period with strong margins offsetting lower year-on-year volumes. Prior year included a short-term benefit from increased demand during the autumn fuel shortage.

In Food, there was a headline operating profit of £2.1m (H1 2021: £1.5m) thanks to a strong performance with increased distribution activity and continued improvements in operating efficiency.

And in Feeds, a headline operating profit of £2.1m compared with a £400,000 loss a year ago. The performance was ahead of expectations with volume a little lower than the prior year as a result of good grazing conditions. This was more than offset by a strong margin as farmers optimised feed rations to benefit from a significantly higher milk price.

Chief executive, Richard Whiting, said: “We have delivered a record first half with a good performance from all three divisions in spite of an uncertain economic outlook and inflationary pressures.

“NWF has continued to demonstrate its resilience as a business and has significant further growth opportunities. The acquisition of Sweetfuels in December highlights delivery of our growth strategy to consolidate the fragmented fuels distribution market.

“We have started the important winter period well and continue to focus on the long term growth of the group, with a clear investment strategy, which is supported by a strong financial position.”

The group also announced it has issued awards under the company’s incentive plan to several key staff.

Richard Whiting will receive an award of a conditional right over a maximum of 138,478 ordinary shares of 25 pence each at a price of 230p per share, being the mid-market price at the close of business on January 30, 2023. This award is subject to the following performance targets: If the reported headline basic earnings per share for the three financial years ending May 31, 2025, increases by RPI plus two per cent per annum then 41,543 shares will be issued under the plan; and the maximum of 138,478 shares will be issued if the reported headline basic earnings per share increases by RPI plus eight per cent per annum for the three financial years ending May 31, 2025.

Following the award, Richard Whiting will be interested in 428,917 conditional awards over shares.

Chris Belsham, group finance director, will receive an award of a conditional right over a maximum of 83,261 shares. This award is subject to the following performance targets: If the reported headline basic earnings per share for the three financial years ending May 31, 2025 increases by RPI plus two per cent per annum then 24,978 shares will be issued under the lan; and the maximum of 83,261 shares will be issued if the reported headline basic earnings per share increases by RPI plus eight per cent per annum for the three financial years ending May 31, 2025.

Following the award, Chris Belsham will be interested in 257,877 conditional awards over shares.

Rob Andrew, company secretary, will receive an award of a conditional right over a maximum of 62,500 shares. This award is subject to the following performance targets: If the reported headline basic earnings per share for the three financial years ending May 31, 2025, increases by RPI plus two per cent per annum then 18,750 shares will be issued under the plan; and the maximum of 62,500 shares will be issued if the reported headline basic earnings per share increases by RPI plus eight per cent per annum for the three financial years ending May 31, 2025.

Following the award, Rob Andrew will be interested in 193,493 conditional awards over shares.

Andrew Downie, managing director of NWF Agriculture, will receive an award of a conditional right over a maximum of 59,429 shares. This award is subject to the following performance targets: If the reported headline basic earnings per share for the three financial years ending May 31, 2025, increases by RPI plus two per cent per annum then 17,829 shares will be issued under the plan; and the maximum of 59,429 shares will be issued if the reported headline basic earnings per share increases by RPI plus eight per cent per annum for the three financial years ending May 31, 2025.

Following the award, Andrew Downie will be interested in 185,360 conditional awards over shares.

Angela Carus, managing director of Boughey Distribution, will receive an award of a conditional right over a maximum of 57,098 shares. This award is subject to the following performance targets: If the reported headline basic earnings per share for the three financial years ending May 31, 2025 increases by RPI plus two per cent per annum then 17,129 shares will be issued under the plan; and the maximum of 57,098 shares will be issued if the reported headline basic earnings per share increases by RPI plus eight per cent per annum for the three financial years ending May 31, 2025.

Following the award, Angela Carus will be interested in 57,098 conditional awards over shares.

Adrian Kearsey, an analyst with investment bank Panmure Gordon, said: “NWF, the specialist distributor of fuel, ambient food and animal feed, has delivered a solid first half.

“All three divisions are performing well. Pre-tax profits were up +44% to £6.2m. The group has traded well since the period end, maintaining ‘encouraging momentum into the seasonally busier second half’.

“At this stage we are leaving our full year PBT forecasts unchanged – having raised them in December – but see the risks comfortably on the upside.”