Considering low oil prices and continued pricing pressure from its farmer clients, things could have been worse for oil and feed producer NWF (NWF). Excluding pensions and acquisition costs, adjusted operating profit was flat at £2.8m.
The fuels division saw revenue fall by just over a tenth to £143m. Staffordshire Fuels, acquired in November, will improve the company's market penetration, but a warm winter has further suppressed demand in December and January. The group's feeds division has also mitigated some of its market difficulties through the acquisition of cattle advisory business New Breed. Although farmers have seen no respite in low milk prices since the period end, the specialist advice provided by New Breed helped reduce the fall in revenue, and push adjusted operating profit higher.
While revenue from its food operations grew, the need for external storage space meant reduced operational efficiency which hit profits. However management has worked to improve NWF's deal on outside storage, and levels have reduced since Christmas. Net cash generation is up 19 per cent at £3.2m, and management is open to further acquisitions.
Broker Peel Hunt expects a full-year adjusted EPS 13.5p for the year to May 2016, compared with 3.1p in FY2015.
| NWF (NWF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 164p | MARKET VALUE: | £80m | |
| TOUCH: | 162-165p | 12-MONTH HIGH: | 206p | LOW: 127p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 75p* | NEBT DEBT: | 28% | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 247 | 2.1 | 3.4 | 1.0 |
| 2015 | 225 | 1.8 | 2.9 | 1.0 |
| % change | -9 | -14 | -15 | |
Ex-div: 24 Mar Payment: 3 May *Includes intangible assets of £22.2m, or 46p per share | ||||
