A dizzying combination of grain price rises, an unusually warm winter and the reorganisation of its food division all contributed to the 33 per cent slump in operating profits at specialist distributor NWF.
The hardest hit division was fuels, which NWF supplies to small businesses and private homes, as volatile prices, a dormant economy and a 20 per cent fall in demand over the winter meant that operating profits crashed from £3.3m to just £600,000, even though revenues climbed 18.5 per cent to £364m. The feed business also experienced commodity cost volatility, which reversed some one-off gains from price rises in 2011 and, with margins returning to more normal levels, this led to a one-third fall in operating profits to £2.7m.
However, analysts at Peel Hunt note that "the recent spike in input costs as a result of the drought in the US should provide good trading opportunities for NWF in the current year". Sales also fell at the food division, down 4.1 per cent but, with the benefit of cost-cutting, operating profits rose 50 per cent to £3m.
Broker Peel Hunt forecasts current year pre-tax profits of £6m and EPS of 9.5p (from £5.1m and 8p in 2012).
NWF (NWF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 100p | MARKET VALUE: | £47.2m | |
| TOUCH: | 99-102p | 12-MONTH HIGH: | 131p | LOW: 93p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 54p* | NET DEBT: | 60% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 361 | 4.2 | 6.0 | 3.9 |
| 2009 | 381 | 6.2 | 3.0 | 4.1 |
| 2010 | 380 | 7.1 | 10.4 | 4.3 |
| 2011 | 464 | 7.6 | 11.5 | 4.5 |
| 2012 | 540 | 5.1 | 8.1 | 4.5 |
| % change | +16 | -33 | -30 | - |
Ex-div: 22 Aug Payment: 4 Dec *Includes intangible assets of £11.6m, or 25p a share | ||||
