NWF Group plc Posts Robust FY2026 Results with 15th Straight Dividend Hike and 19% Growth in Food Division

Operational Resilience and Strategic Acquisitions Amid Fuels Market Volatility

During the financial year, NWF Group faced a challenging trading environment, particularly in its Fuels division. The first six months saw significant headwinds, compounded by further disruption in the final quarter. Unseasonably warm weather in late spring and autumn 2025 caused UK heating oil demand to fall 16% year-on-year, with commercial gas oil demand down 6%, pressuring volumes and margins across fuel products. Fuels headline operating profit declined slightly to a38.1 million from a38.4 million the previous year.

The outbreak of the Middle East conflict in March 2026 triggered notable oil price volatility, with Brent Crude peaking at $118 per barrel in April 2026 and bottoming at $59 per barrel in December 2025. This volatility, alongside a sharp drop in heating oil demand in the final quarter despite initial panic buying, created a tough trading backdrop. However, steady demand for commercial diesel and gas oil helped offset pressures, and the group capitalised on pricing fluctuations to improve financial outcomes. Fuels volumes were 647 million litres, slightly below last year's 660 million litres, while revenue rose 4.0% to a3636.7 million, reflecting higher oil prices late in the year.

Strategically, NWF completed two Fuels acquisitions: Noel Booth & Sons Limited for a31.6 million in July 2025 and Harrison Oils Limited for a33.2 million (net of cash) in September 2025. Both were integrated into a new regional operating model launched nationally in July 2025, replacing autonomous depot operations with centralized regional hubs for sales and operations. This restructuring aims to boost sales effectiveness, enhance customer service, and optimise tanker fleet use. Although market challenges delayed full implementation, the group anticipates the model will drive organic market share gains and operational efficiencies once fully embedded.

Food Division Growth Accelerates with Market Expansion Opportunities

The Food division delivered strong performance, with headline operating profit rising 19% to a35.1 million from a34.3 million the prior year. Growth was fueled by increased demand from new and existing customers, leading to higher storage volumes and throughput across the warehouse network. The division benefited from a cost restructuring completed in June 2025, enhancing operational leverage, and the first full year of the Lymedale warehouse operating at full capacity.

Food division revenue increased 5.1% to a390.6 million compared to a386.2 million previously. Average storage utilisation reached 165,000 pallets (90.4% capacity), up from 156,000 pallets the year before. Throughput grew 4.0% year-on-year. At year-end, utilisation rose to 174,000 pallets, prompting temporary use of third-party offsite storage to accommodate demand. While this created short-term inefficiencies, it signals robust growth prospects as the division plans warehouse network expansion.

Strategic initiatives included standardising operations, strengthening commercial, warehouse, and transport teams, and beginning rollout of a new transport management system and customer portal. These investments position the Food division to expand beyond its North-West England base and capture additional share in the UK’s ambient grocery consolidation market, estimated at over a31.5 billion annually. Currently holding approximately 4.4% market share, the division aims to build a national network leveraging transport synergies through acquisitions, warehouse investments, and strategic partnerships.

Feeds Division Maintains Stability Amid Dairy Market Softening

The Feeds division maintained stable headline operating profit of a33.6 million, consistent with the prior year. Strong milk prices in the first half supported customer demand and favourable pricing for nutritional advisory services. Nutritional advisors worked closely with farming customers to optimise herd yields during high milk price periods and manage input costs as prices declined in winter.

Volumes remained broadly flat despite softening dairy market sentiment in the second half. The new moist feed product line, launched previously, continued outperforming expectations, highlighting the division’s innovation capabilities. Effective margin and cost controls helped sustain profitability despite challenging commodity prices. Looking ahead, anticipated lower milk prices may impact demand, necessitating continued focus on operational efficiency and cost management.

Strengthened Balance Sheet and Cash Flow Support Growth Initiatives

NWF Group ended the year with a net cash position of a39.0 million (excluding IFRS 16 lease liabilities), a 42.9% improvement from a36.3 million the prior year. This was achieved despite a34.8 million cash spent on Fuels acquisitions and ongoing investments in business improvements and organic growth. The group's strong cash generation reflects the cash-generative nature of its three divisions and disciplined capital allocation.

The company’s pension scheme moved into an accounting surplus, enhancing balance sheet flexibility and reducing funding needs. Return on capital employed improved to 17.8% from 17.5%. Headline EBITDA rose 2.7% to a322.8 million from a322.2 million. Statutory operating profit more than doubled to a316.8 million from a312.6 million, benefiting from a a31.4 million insurance claim, partially offset by acquisition transaction costs and ERP implementation expenses.

Dividend Increase Reflects Board Confidence in Long-Term Growth

The board proposes a total dividend of 8.7p per share for FY2026, up 3.6% from 8.4p the previous year, marking the 15th consecutive annual increase. The final dividend of 7.7p per share (up from 7.4p) is payable on 4 December 2026, following an interim dividend of 1.0p paid earlier. This sustained dividend growth underscores management’s confidence in the group’s financial strength and growth prospects.

Despite facing Fuels division headwinds and making strategic acquisitions, the board’s decision to raise dividends highlights confidence in navigating market cycles while funding growth and maintaining shareholder returns. Diluted headline earnings per share declined 3.2% to 17.9p from 18.5p, reflecting financing costs and modest margin compression despite improved headline operating profit.

FY2027 Outlook and Current Trading Environment

Trading in the current financial year shows Fuels division conditions normalising, though domestic heating oil demand remains below historical norms due to structural shifts in heating systems and decarbonisation regulations. The board expects FY2027 performance broadly in line with FY2026, assuming continued stable Fuels trading conditions, steady Food division demand, effective Feeds margin management, and successful regional operating model embedding in Fuels to realise synergies.

Growth will continue through targeted acquisitions, organic investments, and business improvements supported by a strong balance sheet. However, geopolitical uncertainties and energy market volatility may impact forward planning, especially in Fuels earnings.

Competition and Markets Authority Heating Oil Market Study

The UK Competition and Markets Authority (CMA) initiated a market study on domestic heating oil retail supply on 20 March 2026. NWF Group, the UK’s third largest bulk fuel distributor with under 5% market share, engaged proactively and submitted detailed responses. On 15 July 2026, the CMA concluded the market operates under broadly competitive conditions.

The CMA recommended a proportionate regulatory regime with enhanced consumer protections. NWF welcomes the findings and commits to constructive engagement with regulators and industry stakeholders. The board does not currently anticipate material operational or financial impacts but will monitor regulatory developments closely, recognising potential medium-term effects on processes and competition.

Business Improvement and Organisational Capability Enhancements

Throughout the year, the group implemented multiple improvement initiatives across divisions and shared services, including significant IT infrastructure and data analytics investments, standardisation of financial and IT processes, and strengthening of management capabilities. The group emphasises continuous operational excellence and process standardisation alongside local market responsiveness to sustain competitive advantage.

The Food division focused on operational efficiencies, commercial team strengthening, and transport capability enhancements. It began deploying a new transport management system to optimise routing and fleet use, alongside a customer portal to enhance digital engagement and order management. These investments support the division’s strategic goal to build a scalable national platform in the fragmented ambient grocery consolidation sector. The Fuels division continues embedding its regional operating model to improve sales, operations, and fleet utilisation as implementation progresses.

Sector Trends and Market Dynamics Impacting Group Performance

NWF Group operates in distinct markets with unique dynamics. The Fuels division faces a mature market challenged by regulatory decarbonisation drivers and a shift from oil-based heating, amid a fragmented operator landscape offering consolidation opportunities but long-term volume risks. The Food division serves the growing ambient grocery consolidation market, valued at over a31.5 billion, driven by supply chain complexity and retailer consolidation. The Feeds division operates in the cyclical agricultural nutrition market, influenced by commodity and milk prices but supported by ongoing UK food production needs.

Risk Factors and Forward-Looking Considerations

The group faces risks including Fuels division exposure to oil price volatility, geopolitical events, and changing heating demand patterns. The Middle East conflict highlighted how geopolitical shocks can disrupt prices and volumes. Long-term thermal fuels market decline due to decarbonisation requires strategic adaptation.

The Food division’s growth depends on successful warehouse expansion, customer acquisition, and integration amid competitive pressures. Geographic expansion introduces operational challenges. The Feeds division is sensitive to agricultural market fluctuations affecting demand and margins. Across divisions, competition from large logistics providers, labour cost inflation, and regulatory changes in employment, environment, and consumer protection remain ongoing challenges.