Specialist food, fuel and feed distributor NWF (NWF) posted better than expected results for the year to 31 May thanks to a resilient performance in food and feeds and ‘significant outperformance’ in its fuel supply business.

Revenues for the year were 2.4% higher at £687.5 million but operating profits rose a whopping 40.2% to £14.3 million as the firm took advantage of higher demand and higher margins in its fuel oil business. Shares rallied 4% to 213p, their highest level in more than two years.

The fuel business benefited from the unprecedented fall in oil prices in the second quarter, with Brent crude hitting a low of $19 per barrel, which allowed it to offer lower prices to its customers while at the same time enjoying significantly better profit margins.

At the same time the animal feed business increased its volumes and market share despite a shrinking market, and the food business expanded significantly with the addition of a new 240,000 square foot warehouse at Crewe backed by customer contracts.

Thanks to a lower net working capital requirement and strong cash generation, gearing fell to 0.7 times earnings before interest, taxation, depreciation and amortisation (EBITDA) even though the firm spent close to £8 million on acquisitions and expansion during the year.

This allowed it to raise the dividend to 6.9p per share with almost three times dividend coverage, while still giving the company significant headroom to continue investing for growth.

Peel Hunt’s Charles Hall, the UK’s top-rated equity analyst for the third year running, described the results as ‘impressive and well ahead of expectations.’ Maintaining his buy call, Hall believes NWF is ‘clearly in a good position to perform well through Covid-19 and beyond.’


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Issue Date: 04 Aug 2020