Impact of Covid-19 and Brexit uncertainty hit NWF interim profits

Fuel, food and feed distributor NWF saw performance fall in the latter half of last year as the impact of Covid-19 and Brexit uncertainty took its toll on the business.

Reporting its first half-year results to 30 November the group revealed that group revenues had fallen by 11.3% to £309.4m (H1 2019: £348.9m) with operating profit down 14.3% to £3m (H1 2019: £3.5m).

However the group, which owns Boughey Distribution, said it remains financially strong and is continuing its acquisition drive in the fuels sector.

The group’s fuels division saw profits rise in the period to £1.9m (H1 2019: £1.4m). It said the rise was driven by an increase in gas and oil sales and “positive contribution from acquisitions”.

NWF’s foods division saw revenue rise by 12.7% to £27.5m (H1 2019: £24.4m). However, operating profit fell sharply to £500,000 (H1 2019: £1.4m).

The group attributed the fall in operating profit to “significant unplanned demand volatility” due to Covid-19 and Brexit uncertainty, the launch of the group’s new Crewe warehouse and the need to build customer stock levels.

It added that “with restrictions on hospitality in place for much of the period, demand from higher value cash and carry and food service customers has been depressed, albeit offset in activity terms by increased supermarket demand”.

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Storage volumes increased to an average of 121,000 pallet spaces (H1 2019: 106,000), with total capacity now standing at 135,000, boosted by the opening of the group’s new Crewe 35,000 pallet space warehouse and new long-term contracts with customers.

NWF, which is a Palletline member, said the number of pallets shipped in the period was 19% higher than the same time in the previous year.

The group’s feeds division saw revenue decrease by 3.1% to £76.2m (H1 2019: £78.6m) in the period due to lower volumes. Headline operating profit was £600,000 (H1 2019: £700,000).

Volumes were 11.8% lower at 262,000 tonnes (H1 2019: 297,000 tonnes) which NWF said was due to reducing sales volumes to lower value customers.

The group has also tightened up cyber security measures after its IT systems were hacked in November last year. It said costs associated with the incident are “not expected to be material”.

Looking ahead, NWF said that whilst volatility continued to impact activity levels in the food division, acquisition activity has resumed in the fuels division and volumes are increasing in the feed sector along with further increases in commodity prices.

Richard Whiting, chief executive of NWF Group said: “We had a solid first half with trading in line with our expectations and those for the full year remain unchanged.

He added: “We remain confident in our growth potential and our strong financial position gives us the flexibility and capacity to continue to target development opportunities.”