Investors in feed and fuel distributor NWF Group (NWF) shouldn't get too concerned about the performance of the food storage division over the first half of its financial year. Yes, profit in the division fell by nearly half, from £1.6m to £0.9m, but the underlying problem has been alleviated. The excess capacity that NWF encountered over the period, filling 89,000 pallet spaces compared to 103,000 the previous year, has now been filled by new contracts won mainly since the period end. This means that it should soon be operating at full capacity, at least according to management, giving better revenue visibility for the next two years or so.
The tough time in the food business was mitigated by the animal feeds and fuel businesses. A higher price for milk encourages farmers to buy more feed and other products from NWF to help their dairy herds increase yields. Improved assumptions on pricing helped revenue in this division increase by a fifth to £77.8m and operating profit to recover from a £0.3m loss last year to a £0.4m gain this year. Fuel sales improved by 16.3 per cent thanks to higher volumes of diesel and gas sold.
Analysts at Peel Hunt expect pre-tax profits of £8.8m in the year to May, giving EPS of 14.5p, compared with £8.5m and 13.6p in FY2017.
| NWF GROUP (NWF) | ||||
| ORD PRICE: | 168p | MARKET VALUE: | £ 82m | |
| TOUCH: | 165-170p | 12-MONTH HIGH: | 180p | LOW: 132p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 81.3p* | NET DEBT: | 41% | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 256 | 1.3 | 2.1 | 1.0 |
| 2017 | 296 | 1.9 | 3.1 | 1.0 |
| % change | +16 | +46 | +48 | - |
| Ex-div: | 22 Mar | |||
| Payment: | 01 May | |||
| *Includes intangible assets of £22.8m or 47p per share | ||||
