Specialist distributor NWF Group (NWF) reported a 25% increase in first-half pre-tax profits to £3m thanks to strong demand in its fuel- and food-delivery businesses, sending the shares up 2.2% to a fresh year-high of 185p.

Turnover in the fuels business rose by 10.6% to £245.9m, despite a lower oil price, as sales of gas oil and heating oil rose due to mixed weather in the six months to the end of November.

Volumes were helped by a more targeted sales effort and the contribution from acquisitions. In the last 12 months NWF has acquired five regional fuel distributors adding almost 30% to its annual delivery volumes.

Turnover at the food business increased by 2.5% to £24.4m thanks to a higher volume of pallets despatched with a small bump ahead of the expected Brexit date at the end of October.

The firm has just signed lease on a new 240,000 square foot warehouse in Crewe to handle delivery for a major food company which has signed a new five-year contract so the volume of pallets shipped will rise significantly in coming quarters.

Start-up costs for the new facility are estimated at £500,000 with profits coming through in the financial year starting in June.

Both the fuel and food businesses are second half-weighted and analysts expect pre-tax profit of £6m for the six months to the end of May.

The feed business held up well considering the collapse in commodity prices, with first half revenues down 6.8% to £78.6m compared with a total feed market which was down more than 10% on last year when dry weather lifted demand.

Despite the spate of acquisitions, NWF's ratio of net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) is still low at one times as the firm is increasing its profitability.


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Issue Date: 28 Jan 2020