A sharp rise in commodity prices is good news for farmers and businesses geared into the industry. That's partly why NWF 's (NWF) results went down well with the market despite an operating loss for its feeds division, which dragged the respective group-wide number down a quarter to £1.8m. Chief executive Richard Whiting said depressed milk prices had led to farmers feeding their herds less. But with average prices at 25.5p in November (24.6p in November 2014), things are improving. Data from government department Defra shows farmers used 8 per cent more feed in November last year than the same month in 2015. NWF's volumes also rose, so it gained market share despite a wider market contraction.
The food division, which stores the likes of tuna, tinned tomatoes, Typhoo tea and Lavazza coffee for manufacturers and transports the goods to retail distribution centres, saw operating profits rise. Mr Whiting said even though one customer, Princes, would be storing fewer goods with NWF, replacement contracts had already been lined up. The fuels division suffered a small drop in operating profit due to higher demand for road diesel and gas oil, which are lower margin than heating oil.
Broker Panmure Gordon expects pre-tax profit of £7.8m for the year to May 2017, leading to EPS of 12.4p, compared with £7.6m and 12.1p in FY2016.
| NWF (NWF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 178p | MARKET VALUE: | £87m | |
| TOUCH: | 175-181p | 12-MONTH HIGH: | 182p | LOW: 138p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 71p* | NET DEBT: | 55% | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 224.60 | 1.8 | 2.9 | 1.0 |
| 2016 | 255.90 | 1.3 | 2.1 | 1.0 |
| % change | +14 | -28 | -28 | - |
Ex-div: 23 Mar Payment: 2 May *Includes intangible assets of £23.1m, or 48p a share | ||||
