PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 19:08 UK, 29th Jan 2013, by Agrimoney.com
Poor UK weather fuels jump in NWF feed profits

NWF revealed a boost to its feeds business from the dismal UK weather as the fuels-to-warehousing group unveiled a 28% jump in pre-tax profits, and underlined its appetite for growing in agriculture.

The 141-year-old company, formerly known North Western Farmers, said that operating profits in its feeds division soared to 1.6m in the June-to-November period, from 600,000 a year before, beating company expectations.

The increase in the division, which provides feed for one-in-seven UK dairy cows, reflected a 10.1% rise to 66.2m in revenues, underpinned by the quest by farmers for feed as doffer crops failed in the wettest summer in a century, and pasture condition deteriorated.

"Market volumes increased in the period as a result of the poor grazing conditions through the wet summer and autumn, and inferior silage quality," NWF said.

Appetite for deals

And the group - whose food storage business has been hurt by a "slower-than-anticipated" pace of contract wins restated its appetite for further growth in its historic agriculture field, including by acquisition.

"We are continuing to work on development plans with a particular emphasis on opportunities in the agriculture markets," Mark Hudson, the NWF chairman, said.

A person close to the company said the group was "actively looking for bolt-on acquisitions in the agriculture side", having already built up the fuels business through takeovers such as that of Evesons two years ago.

"They feel agriculture offers the best chance for profitable growth."

Companies including Wynnstay, the feed-to-grain trading group, have also unveiled an interest in UK agriculture deals.

Market reaction

The group's overall results, showing a rise in pre-tax profits to 2.9m despite a 2.7% drop to 265.5m in revenues, were deemed "robust" by Charles Stanley analyst Peter Ashworth, who restated an "add" rating on NWF shares, with a price target of 135p.

Mr Ashworth added: "The prospect remains for potential price increases for the milk at the wholesale level which is positive for farmers," and would improve market conditions for suppliers to dairy farmers.

Share Capital, saying the results "look to be in line with market expectations", kept a "buy" rating on NWF shares, as did Peel Hunt analyst Charles Hall, who raised to 137p, from 115p, his target price for the stock.

"We expect the company to start to deliver on its strategy to increase focus on the agribusiness sector," Mr Hall said.

NWF shares closed 2.5% lower at 116p in London.

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