Companies: NWF   

Fomer farmers co-operative NWF limped through the first half-year to November after three divisions fell into losses, but prospects have already turned for the good.

New chief executive Richard Whiting's reign began with higher oil prices upsetting the fuels division, frail consumer spend and bad weather affecting its garden centres, and the massive expansion of its distribution business causing uncertainty. Providing some relief was the feeds division, where high milk prices inspired farmers to increase orders to fatten up their Friesians.

Interim figures showed group pre-tax profits falling by two-thirds to £800,000, despite 11% sales growth to £172.7m, though Whiting is confident the second half will see a turnaround. Feeds should see increased demand, with farmers requiring more food for the larger herds that they are breeding, and a good spring and summer should benefit garden centres more than waning consumer spending will hold them back. Within fuels, higher oil prices are now ‘normal’ for consumers and margins have recovered. Finally, the distribution business should see a 'step-change' in profitability when its extra capacity is filled, with a swathe of new customers having already moved in.

Since new warehouses are coming on stream later than expected, house broker Charles Stanley says the full-year figures will be ‘significantly behind’ expectations and has downgraded pre-tax profits to £3.6m and earnings to 5.1p. Though the shares have almost halved since the start of the year, with fuels and feeds performing well and distribution still to reach optimum performance, there is no catastrophe at NWF. Hold.

Growth Company Investor subscribers have full access to all our AIM and small-cap share recommendations. To subscribe today with a half-price offer, and gain immediate access to all the recommendations, click here.

NWF Group	AIM	£46.89m	100.00p	2.00p
Click here for interactive charting
Other company articles:
AIM News			06/10/2008
NWF Group			13/08/2008
NWF			06/02/2008
NWF			15/08/2007
The week ahead, floats and results			09/08/2006