REG - NWF Group PLC - Trading Update

NWFAnnouncement

13/06/2024 07:00

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RNS Number : 2196S  NWF Group PLC  13 June 2024

For release 7.00am Thursday 13 June 2024

NWF Group plc

 

NWF Group plc: Trading Update

 

NWF Group plc ('NWF' the 'Company' or the 'Group'), the specialist distributor
operating in UK markets, today provides a trading update for the financial
year ended 31 May 2024 ("FY24").

Trading update

The Board reports that the Group's FY24 results are anticipated to be in line
with market expectations(1), reflecting the previously expected normalisation
in the Fuels and Feeds markets alongside a strong contribution from Food.

 

Fuels:

 

Volumes in FY24 remained ahead of the prior year, in part benefitting from
increased commercial customer orders as the mild weather across the winter
resulted in low demand for domestic heating oil.

 

As noted at the half-year results, and as expected, margins continued to
normalise during the second half from the abnormally elevated level
experienced in the prior year, as the market continued to experience stable
supply conditions and competitive pricing of diesel and gas oil given the
lower demand for heating oil. This resulted in a lower operating profit pence
per litre, which is expected to continue during FY25.

 

The business has actively managed its cost base through optimising its sales
team and tanker fleet whilst committing to increased investment in fleet
renewals during FY25.

 

The Board continues to consider acquisition opportunities for Fuels in line
with the stated strategy, supported by a robust financial position.

 

Food:

 

The business traded strongly in FY24 and ahead of the prior year. Storage
volumes reached a peak of just over 146,000 pallet spaces (FY23: 126,000
pallet spaces) which required the business to utilise overflow storage
facilities efficiently, and as planned. Pallet throughput was higher than the
prior year, reflecting the high storage levels.

 

The fit out of the new 52,000 pallet space warehouse at Lymedale has
progressed in line with its business plan and the site is now partially
operational for both storage and distribution. This will support the growth of
the business into FY25 and beyond.

 

Having absorbed ramp-up costs in FY24, Lymedale is expected to have a net
neutral impact in the current financial year, whilst incurring IFRS16 interest
charges in respect of the warehouse lease and associated additional leased
vehicles.

 

The customer pipeline remains strong, and the Board continues to consider
further growth opportunities to service this demand for its services.

 

Feeds:

 

Volumes in FY24 were behind the prior year as ideal grass growing conditions
across the summer and autumn provided farmers with significant forage for the
winter. This was partially mitigated by the wet winter and spring which
extended the usual winter season demand into April.

 

As reported in the half-year results, weaker milk prices and reduced
volatility in raw material prices over the prior year have resulted in the
expected normalisation of margins. Against this backdrop, the business has
delivered effective management of both margin and operational costs.

 

Financial position

 

Net cash at the year-end of £10m is in line with market expectations(1,)
reflecting the trading result, effective working capital management and the
investment in the new warehouse at Lymedale.

 

The robust financial position supports the strategic focus on targeted
acquisitions in Fuels, and the increased level investment during FY24 and FY25
in Lymedale and the new fleet.

 

 

Notice of Results

 

NWF expects to announce its results for the year ended 31 May 2024 in late
July.

 

Chris Belsham, Chief Executive of NWF Group said:

"NWF has delivered a solid financial performance as it experienced more
challenging conditions than in recent years, with market pricing normalising
for Fuels and Feeds, the impact of which has continued into the new financial
year.

"The investment in the new Lymedale warehouse to meet the growing customer
demand in our Food business has progressed in line with plan which will
support the future growth of the business.

"We continue to focus on our long-term growth strategy of development through
targeted acquisitions, organic investment including significant investment in
new fleet and improvement initiatives, supported by our strong financial
position and confidence in NWF's potential and prospects."

 

Information for investors, including analyst consensus forecasts, can be found
on the Group's website at www.nwf.co.uk.

(1)Company compiled analyst consensus is for headline operating profit of
£14.5m (FY2023: £21.0m), headline profit before tax of £12.7m (FY 2023:
£19.6m) and net cash of £11.9m.

 

 Chris Belsham, Chief Executive            Reg Hoare / Catherine Chapman  Mike Bell / Ed Allsopp
 Katie Shortland, Chief Financial Officer

 NWF Group plc                             MHP                            Peel Hunt LLP
                                                                          (Nominated Adviser and broker)
 Tel: 01829 260 260                        Tel: 020 3128 8100             Tel: 020 7418 8900

 

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