NWF Group (NWF) experienced a 26 per cent boost to half-year profits, driven by growth in its fuel and food divisions. The fuel, animal food and feeds distributor completed two acquisitions during the period under review, and another post period-end. Five additions to NWF’s fuels business over the past 12 months have added nearly 30 per cent to the division’s annualised volumes.
The deals add to a steady stream of acquisitions, as the group looks to build scale. NWF also secured a new five-year contract with a "major food customer", which has prompted the signing of a lease for a new 240,000 square foot (sq ft) warehouse to support the group’s expansion. More surprising, however, is NWF’s working capital improvement.
As a seasonal business, the group tends “to experience a working capital outflow during its first half, according to Panmure Gordon analysts. But over its most recent half-year, NWF generated a net working capital inflow of £1.7m, giving a positive free cash flow of £2.3m – its best first-half performance since 2010. “Cash generation was strong, with lower commodity prices in particular delivering working capital benefits in feeds,” the company said.
House broker Peel Hunt forecasts adjusted pre-tax profits and EPS of £9.5m and 15.7p for the May 2020 year-end, rising to £10.7m and 17.6p in FY2021.
| NWF GROUP (NWF) | ||||
| ORD PRICE: | 185p | MARKET VALUE: | £90.3m | |
| TOUCH: | 180-190p | 12-MONTH HIGH: | 187p | LOW: 127p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 100p* | NET DEBT: | 31%** | |
| Half-year to 30 Nov | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 331 | 1.9 | 2.80 | 1.00 |
| 2019 | 349 | 2.4 | 4.00 | 1.00 |
| % change | +6 | +26 | +43 | - |
| Ex-div: | 19 Mar | |||
| Payment: | 6 May | |||
| *Includes intangible assets of £28.3m, or 58p a share **Excludes lease liabilities of £16.1m | ||||
