NWF signs up for big shed in Staffs
Agri supplies business NWF has agreed a lease between its subsidiary Boughey Distribution and Aver Property for a 332,000 sq ft warehouse at Lymedale Business Park in Newcastle-under-Lyme.
The investment follows on from the success of the NWF’s Crewe 240,000 sq ft warehouse, which opened in 2020, and in a statement to the stock market this morning, the Cheshire-headquartered group said that warehouse expansion backed by customer and retailer demand will lift trading in 2024. The lease is for a period of 15 years with a tenant only break clause after 12 years and will be supported by a parental guarantee.
The newly constructed warehouse, located close to the M6 and the NWF’s existing sites in Crewe and Wardle, lifts the capacity of the food division by 52,000 pallets to a total of 187,000 pallet spaces, supporting strategic growth and ongoing demand from its customers for ambient grocery consolidation and distribution. The Group’s capacity was 100,000 pallet spaces prior to the opening of the Crewe warehouse.
The company said the costs are expected to impact headline PBT in the current financial year ending 31 May 2024 by approximately £1.7 million. The net impact in the financial year ending 31 May 2025 is expected to be zero, as ramp-up costs are offset by revenue, with a full run-rate of profitability achieved during financial year ending May 2026 as noted above.
Chris Belsham, chief executive designate of NWF Group said: “The addition of 52,000 pallet spaces in our Food business allows us to meet the growing demand for our first-class services and will drive further growth in line with our strategy for our Food business. Once opened, we will have nearly doubled our capacity in Food over the last five years and transformed the contribution of the business to the Group’s growth and profitability.”
Analysts and market makers at Panmure Gordon added an immediate BUY to NWF’s shares this morning, saying dividend growth and investment in the sheds will positively impact the business. It said: “Over the last seven years, NWF’s three businesses have delivered an average free cash flow of £10.4m. This average represents an 8.5% FCF yield. Moreover, across this period cash generation has been trending higher. This cash generation, combined with the strong balance sheet, underpins the dividend pay-out. Crucially, the pay-out has increased every year for 11 years, delivering a 5.1% CAGR over the period. Therefore, we believe the near 4% prospective dividend yield underpins the shares and we reiterate our positive stance on the stock.”
