NWF Group plc (NWFFF) Q2 2026 Earnings Call Prepared Remarks Transcript

2026-02-03 11:20:28 ET

NWF Group plc (NWFFF) Q2 2026 Earnings Call February 3, 2026 3:00 AM EST

Company Participants

Christopher Belsham - CEO & Executive Director
Katie Shortland - CFO & Director

Presentation

Christopher Belsham
CEO & Executive Director ...

Hello, and welcome to the NWF Group results presentation for the half year ended 30th of November 2025. I'm Chris Belsham, the CEO, and I'm joined today by Katie Shortland, our CFO.

We'll start with the highlights of the period. Overall, I'm pleased that we have continued our strategic momentum, delivered solid performances in Food and Feeds, all whilst navigating very difficult market conditions in Fuels. So starting with strategic actions. During the period, we have developed our growth plan for our food business to become a national network of scale, and I'll talk more about that opportunity later.

Meanwhile, in Fuels, we rolled out our regional operating model nationally, and we also did a couple of small bolt-on acquisitions. From a trading perspective, in Food, we saw solid performance with increased stock levels and higher pallet throughput. Feeds delivered a great result with consistent volumes and effective margin management. And Fuels saw really difficult market conditions with suppressed demand for both domestic heating oil and commercial gas oil, and that impacted volume and margins. And that is reflected in the financial summary for the period.

As a reminder, the first half is our seasonally quieter part of the financial year. Revenue was lower, but mainly as a result of the lower oil price. The solid performances in Food and Feeds were more than offset by the impact of the difficult market conditions in Fuels, and that is reflected in our profit metrics, which were all lower than the prior year. Despite our investments in acquisitions, we retain a positive cash balance. And in line with our usual policy, we have declared an interim dividend of 1p per share. As a reminder, our dividend has grown by 4% to 5% each year for the last 14 years.

We'll now quickly look at the individual business highlights. In Fuels, the total U.K. market for heating oil, mainly used to heat domestic homes was down 16% on the prior year, and that is our highest margin product. Then the total U.K. market for our second highest margin product, which is gas oil or red diesel, which is mainly used in agriculture, was down 6% overall and was actually 30% down after the first 3 months. That lower demand resulted in increased competition across all our products, leading to margin pressure and the need to walk away from some very low-margin volume.

Against that backdrop, I am pleased that we completed the national rollout of our new regional operating model. It was not an ideal time to start operating the new model, but I will talk later about some of the benefits that it is giving. As mentioned, we undertook 2 smaller bolt-on deals, both in the Northwest, where there are opportunities for cost synergies through rationalization of both the fleet and the depot footprint.

In Foods, we saw a solid performance. Storage volumes increased to an average of 164,000 as we secured new contracted business. Optimal storage would be about 170,000 pallets, which is circa 90% of our maximum capacity. So I'm pleased that post-period end, we have continued to secure new business from a range of customers. That increased storage led to increased throughput, which is the main driver of our revenue.

We benefited from a lower cost base in our warehouses following the restructuring undertaken in June. The team are very focused on continued efficiency opportunities across both transport and the warehouses to optimize our current platform and ensure we have scalable processes for future growth. In feeds, the milk price was lower but stable and still profitable for farmers. Our volumes were in line with last year, which was a strong comparative period. We continue to manage margins and the cost base effectively, and I'm very pleased that the new moist Feed product line, which was launched last year, continued to perform well ahead of plan.

Now before we move on to our business model, it's worth a quick look at the Fuels market data. The top 2 charts show the volume of heating oil and gas oil sold in the U.K. for this half year versus last year. And you can see that those are down 16% and 6%, respectively. Now we don't believe there is any structural reason for the shortfall in demand, and you can see that in the bottom chart, which shows the rolling last 12 months heating oil volume over the last 10 years. This shows that significant events can shift the volume demand, whether upwards or downwards, but that it then reverts to the average over time.

So if we look at the chart, the first spike in the orange circle was in 2018 when we had the Beast from the East. Then you can see in 2020 and 2021, we had COVID when people were at home with the heating on. And then there was a dip in 2022, which was at the height of the cost of living crisis and the high oil prices following the start of the war in Ukraine. At the end of the chart, you can see the dip of recent months, but we see no reason that market demand will not revert to the mean again, which gives us confidence in future performance.

Now before Katie presents the financial results in more detail, I think it's helpful to give an overview or a reminder of the group's business model. NWF Group exists to add value to supply chains by using expertise to connect customers and suppliers who otherwise would struggle to connect, mainly due to a difference in scale. We currently operate across 3 markets where we apply our expertise in the areas shown in the middle box on the slide.

In Fuels, we connect domestic oil-heated homes and SME fuel users, both bulk buyers of fuel with major U.K. oil suppliers. In Food, we connect smaller grocery brand owners, manufacturers and importers with the U.K. grocery supply chain in the most cost-effective and environmentally friendly way through providing a consolidated storage and logistics solution.

And in Feeds, we connect dairy, beef and sheep farmers with global agricultural commodity traders by formulating yield optimizing diets, procuring commodities, using those commodities to manufacture the diet, then distributing that feed in bulk effectively to farm. And as you can see from these numbers, all of our businesses have significant scale in their specialist markets, which are robust and resilient. That means they all have scale and capability barriers to entry. They need infrastructure, vehicles and the deep expertise in their specialist market to operate successfully.

I'll now hand over to Katie to talk through the financial performance in more detail.

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