The falling price of two very different commodities caused a bit of a headache for NWF (NWF) in the reported period. Milk prices reached a level below the average cost of production, while a barrel of Brent Crude oil fell to a 13-year low, meaning a hit for the group's feed and fuel divisions - which together make up 92 per cent of overall revenue.
Despite these ongoing challenges, the group managed a pretty strong performance in the financial year. Omitting exceptional costs resulting from acquisitions and the defined benefit pension fund, the group reported record headline earnings up from 13.2p to 13.6p. In feeds, headline operating profit was up 16.7 per cent to £2.1m in spite of a fall in revenue, as the group sold more higher-margin product to farmers. The acquisitions of New Breed and Jim Peet helped to expand the group's market share. Together with the ongoing growth in the food division, this helped to offset the 9 per cent decline in headline operating profit in the fuel business.
A crucial metric for NWF is cash flow, which continues to impress. Despite investing £10m in three acquisitions, working capital improvements helped the group generate net cash of £6m.
Broker Panmure Gordon expects 2017 full-year adjusted pre-tax profit of £7.8m, giving adjusted EPS of 12.4p compared with £7.6m and 12.1p in FY2016.
NWF (NWF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 162p | MARKET VALUE: | £79m | |
| TOUCH: | 160-164p | 12-MONTH HIGH: | 206p | LOW: 138p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 76p* | NET DEBT | 27% | |
| Year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2016 | 466 | 6.0 | 9.8 | 5.7 |
| % change | -5 | -24 | -24 | +6 |
Ex-div: 3 Nov Payment: 5 Dec *Includes intangible assets of £23.3m, or 48p a share | ||||
