Fuel volatility drives 'record year' for NWF Group

Fuel, food and feeds specialist NWF Group reported a “record year” in a full-year update on Thursday, in line with its announcement on 10 May, and a “materially stronger performance” than was expected at the start of the financial year.

The AIM-traded firm said the results demonstrated both the “resilience” of the group and its ability to deliver a “good financial performance” in volatile market conditions.

Cash generation remained strong, the board said, and the group was cash positive at the year-end, compared to reporting net debt last year.

In fuels, the company reported an “outstanding performance”, which benefited from “very significant” short-term volatility in oil prices and periods when the UK market was supply constrained.

The teams in its 25 depots had focussed on maintaining service to existing customers, which at times involved trunking fuel across the country to meet regional shortfalls and adapting pricing strategies to mitigate exposure to “challenging” commodity price fluctuations.

In food, the company described a “strong performance” across the year, with warehouses at an effective operating capacity, and the achievement of significant efficiency improvements.

The business had also been successful at passing on inflationary costs by working closely with customers and maintaining high service levels.

Finally, in feeds the firm described a “good recovery in performance” in the second half, with the business “effectively managing” the commodity market price increases and volatility, particularly in the final quarter.

The board said that positively, increases in milk prices had been implemented to ensure farmers were incentivised to produce milk, despite having higher energy, fertiliser, and feed price inputs.

“We have delivered a record result driven by high levels of service provided to customers across the group,” said chief executive officer Richard Whiting.

“The outperformance is principally attributed to the Fuels division where there were both fuel availability issues and significant price volatility.”

Whiting said its depot-based operating model had again proved robust in providing service to local customers, while using its national supply agreements to ensure its maintained deliveries to all customers.

“We entered the new financial year in good shape with strategic progress continuing and a more stable operating environment for the fuels division.”

At 1435 BST, shares in NWF Group were up 0.33% at 226.74p.

Reporting by Josh White at Sharecast.com.