A small drop in revenues means little to NWF (NWF) when falling oil and commodity prices vastly reduce production costs. A better measure of the agricultural sector supplier is its profit margin, and on that count the group put in a decent performance last year in difficult markets.
One example was the fuels division, which took advantage of short-term margin gains of a collapsing oil price to increase underlying operating profit 34 per cent to £4.3m. In food storage, flat revenue pushed NWF to focus on operational efficiencies, enabling a 25 per cent profit jump to £2.5m. Fewer solutions could be found in the feed division, where larger volume sales could not arrest a 45 per cent profit decline, as dairy farm customers continued to suffer break-even milk prices, although NWF last month bought agriculture nutritionist New Breed in a bid to get closer to clients and increase potential sales.
Net debt halved to £5.9m, after a £2.4m legal settlement and strong cash generation. Given the growth prospects in its current markets, NWF will need to dip back into the debt pool to fund acquisitions, although this should be supported by a renewed £65m bank facility, heralded by chief executive Richard Whiting as a major endorsement of the business.
Broker Peel Hunt expects adjusted EPS and pre-tax profit of 13.1p and £8.2m for the year to May 2016, compared with 13.2p and £8.1m in 2014-15.
NWF (NWF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 158p | MARKET VALUE: | £76m | |
| TOUCH: | 156-160p | 12-MONTH HIGH: | 158p | LOW: 120p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 72p* | NET DEBT: | 17% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 464 | 7.6 | 11.5 | 4.5 |
| 2012 | 540 | 5.1 | 8.1 | 4.5 |
| 2013 | 546 | 8.4 | 13.1 | 4.8 |
| 2014 | 538 | 6.9 | 11.2 | 5.1 |
| 2015 | 492 | 7.9 | 12.9 | 5.4 |
| % change | -8 | +14 | +15 | +6 |
Ex-div: 29 Oct Payment: 4 Dec *Includes intangible assets of £15.9m, or 33p a share | ||||
