NWF shares rally as it delivers 40% profit growth

NWF shares rally as it delivers 40% profit growth

Food, fuel and feed distributor NFW (AIM:NWF) saw its shares rally on Tuesday, following the publication of its uplifting results, for the full-year ended 31 May 2020.

Booking year-on-year revenue growth of 2.4% – up to £687.5 million – the company’s operating profit and profit before tax jumped 40.6% and 37.9%, to £13.5 million and £12.0 million respectively.

The situation was equally peachy for NWF shareholders, with fully diluted EPS bouncing 30.2%, to 18.1p, while dividends per share rose 4.5%, to 6.9p.

The company boasted strong performance in it fuels sector, with three acquisitions through the year boosting the scale of its business by 20%. It added that ‘unprecedented’ oil price drops and one-off domestic demand during lockdown, led its full-year operating profit to almost double, from £5.6 million, to £11 million, on-year.

NWF stated that its food segment successfully navigated the increased demand from supermarkets, and its new 240,000 sqaure foot warehouse would increase its storage capacity by 35%, to 135,000 pallets. However, the £0.5 million cost of this acquisition in-part led to the decline in year-on-year profits, down from £1.8 million to £1.4 million.

The feeds division was hardest hit during the financial year, with a mixture of higher energy costs and NWF Academy training future staff, seeing full-year profits drop from £2.8 million, to £1.9 million.

NWF Response

Commenting on the results, company Chief Executive, Richard Whiting, stated:

“NWF has delivered a very strong set of results, ahead of previous expectations, demonstrating both resilience and growth. Three acquisitions have been completed in Fuels and we have added significant additional warehouse capacity to support long-term customer contracts in Food. Feeds gained share with volume growth in a contracting market. The fundamental resilience of the Group has been highlighted with the response to the Covid-19 crisis. Huge thanks must go to all our employees for their outstanding efforts in very challenging times.  All our employees were designated as key workers, demand increased, deliveries to customers were completed and safe working and home working where possible were implemented in early March and remain effective today.”

Investor Insights

Following the news, NWF shares rallied 5.78% or 11.84p, to 216.84p per share 04/08/20 12:06 BST. This price represents a year-to-date high for the company, with its p/e ratio at 12.97, and its dividend yield standing at 3.10%.