NWF Group performs ahead of expectation following strong year

Richard Whiting

NWF Group, the Nantwich-based food, feed and fuel distributor, said annual pre-tax profits should be ahead of current market expectation, in a trading update for the year ended May 31, 2023, today.

It said the group delivered strong performances from all businesses in the first half. Pleasingly, this positive momentum has been sustained through the second half and, consequently, FY23 headline profit before tax is now anticipated to be ahead of the current market expectation of £17.5m, and in excess of £19m.

Net cash at the year-end is also higher than previous expectations as a result of the stronger trading result, ongoing disciplined cash management across the group and some positive working capital movements.

In the Fuels division, volumes recovered in the second half as the team focused on increasing commercial business. The Sweetfuels acquisition has been successfully integrated and is performing strongly, and the board continues appraising earnings accretive acquisition opportunities in line with NWF’s strategy of consolidating a fragmented UK Fuels market.

Demand in the Food division has continued to be robust with storage close to capacity and increased outloads supported by improved operating efficiency

In Feeds, there was solid demand for ruminant feed and ancillary products across the year supported by a strong milk price with the business effectively managing commodity cost volatility and inflationary cost increase.

The group revealed today that it has completed the renewal of its banking facilities with NatWest Group for a three year term on competitive rates, with an option to extend by two years.

The facilities of £61m comprise an invoice discounting facility of £50m, a revolving credit facility of £10m and an overdraft of £1m, with a further £20m accordion available to support the development strategy of the group.

Chief executive, Richard Whiting, said: “We have delivered a very strong result for the group and it’s great to report that all three divisions have performed ahead of expectations in spite of the inflationary and cost of living challenges.

“The group is well positioned with a net cash position and new banking facilities to further develop and grow.”

Adrian Kearsey, analyst with investment bank Panmure Gordon, said: “NWF, the specialist distributor of fuel, ambient food, and animal feed, has issued a positive pre-close update.

“All three divisions delivered healthy performances in the seasonally important second half. As a consequence, management has confirmed that FY23 PBT ‘is now anticipated to be ahead of the current market expectations and in excess of £19.0m’ (or >£18.6m according to our earnings definition).

“This represents a nine per cent outperformance vs our previous forecasts (published in March) and 60% ahead of our FY23 forecasts published this time (June) last year.”

His BUY recommendation remains unchanged.