NWF Agriculture has grown to be a leading national supplier of ruminant animal feed, feeding one in six dairy cows in Britain. The business supplies over 4,750 farmers from Scotland to Cornwall.
- Despite a challenging year for Feeds, profit levels and market share improved
- Two acquisitions are performing well
- Revenue of £135.8 million (2015: £144.9 million)
- Headline operating profit of £2.1 million (2015: £1.8 million)
Acquired New Breed (UK) Limited and Jim Peet (Agriculture) Limited
Two earnings enhancing acquisitions were made in the year, New Breed in June 2015 and Jim Peet in February 2016. New Breed delivers over 45,000 tonnes of ruminant feed in the North and Jim Peet delivers annual volume of over 50,000 tonnes and gives an effective operating platform with two mills in Cumbria.
2016 was a challenging year for Feeds. There was no respite from the impact of low milk prices for our farming customers which, combined with a warm winter, resulted in ruminant feed UK market volumes falling by 4% year on year. In addition, commodity prices drifted down until February 2016 and, with raw materials bought forward, this created challenging trading conditions. Against this backdrop good progress has been made both in market share gains and profitability. Earnings enhancing acquisitions were made with New Breed in June 2015 and Jim Peet in February 2016. New Breed delivers over 45,000 tonnes of ruminant feed in the North and Jim Peet delivers annual volume of over 50,000 tonnes and gives an effective operating platform with mills at Longtown, near Carlisle and Aspatria in Cumbria.
Revenue fell to £135.8 million (2015: £144.9 million) as a result of the reductions in selling prices caused by falling commodity prices in the year. Headline operating profit was up 16.7% to £2.1 million (2015: £1.8 million). Total volume was 2.3% higher at 580,000 tonnes (2015: 567,000 tonnes) with NWF gaining share and additional volume from the New Breed and Jim Peet acquisitions.
A key strategic priority for the business is to increase the nutritional focus in our Feeds division by providing more advice and value added products to our farming customers. In the year an improved on-farm rationing system has been deployed which increases the use of fermentable products and silage sample analysis has been refined and improved. This has been of particular importance in the year to support our farming customers facing a difficult business environment.
Average milk prices in Great Britain decreased during the year by 3.7p per litre to 21.0p in May 2016, a level below the average cost of milk production, which has caused hardship for dairy farmers. Despite this, milk production increased year on year through to March 2016, with total volume ahead by 1.6% to a six-year high of 12.4 billion litres (2015: 12.2 billion litres). The UK market for ruminant feed fell by 4% as a consequence of a warm winter and the lower milk price for farmers.
The Feeds division has a very broad customer base working with over 4,750 farmers across the country. This base and the underlying robust demand for milk and dairy products, results in a reasonably stable overall demand for our feed.