Feed manufacturer NWF Agriculture has posted a 19.5% increase in revenues, and traded profitably after last year’s first half loss. Rising feed demand in line with recovering milk prices, together with stronger commodity prices drove the growth.
The division of the NWF Group made an operating profit of £400,000 on sales of £77.8 million in the six months to November 30th 2017, compared to a loss of £300,000 on revenues of £65.1m in the first six months of the previous financial year. The loss, blamed on delays in restructuring its manufacturing geography through the expansion of NWF’s Cheshire and Cumbrian feed mills, was turned round into a £300,000 full year profit (after £1.2m exceptional costs).
“The significant increase in profits in Feeds is of particular note, demonstrating the expected return on the capital investment completed in 2017,” notes Group chief executive Richard Whiting.
The company says the latest figures show the “planned benefits from the investment at Longtown (Cumbria) and Wardle (Cheshire) are being delivered with increases in operational efficiency driving profitability”.
It notes that the increase in milk prices to more sustainable levels – the average 31.9ppl milk price at the end of November 2017 was 25.6% higher than a year earlier – lifted dairy incomes and the confidence to invest. This in turn saw rising demand for feed – especially from producers who had reduced feed rates in response to the period of lower milk prices.
Actual feed volumes fell by 1.0% year-on-year in the first half to 265,000 tonnes, which the business says is due to a “focus on those customers within an efficient range of our key operational locations”. Feed material costs were relatively stable in H1, despite currency market volatility, although were increasing towards the end of the period.
Looking ahead, NWF Agriculture says its customers “continue to buy feed to optimise their performance in a higher milk price environment, albeit some limited milk price reductions have been announced. Price increases have been implemented to offset recent increased commodity costs and we are introducing new products to support our nutritional advice on farm”.
The NWF Group made a pre-tax profit of £1.9m on revenues of £295.8m (£1.3m and £255.9m in H1 2016. Net debt fell to £16.3m from £19.1m the year before. The Group intends to focus on growth initiatives, both organic and through targeted acquisitions.