NWF Fuels is the third largest distributor of fuel oil and fuel cards delivering over 665 million litres across the UK to 116,000 customers in FY20.
With 116,000 customers being supplied across 25 fuel depots, Fuels operates in markets that are large and robust and, as a business, it has consistently proved it can effectively manage the volatility in oil prices. The industry remains highly fragmented, with many small operators, which we continue to believe provides an opportunity for NWF to further increase market share.
- Consolidate a highly fragmented market.
- Expand existing geographical area.
- Increase business density in existing territories.
- Enhance product and customer mix in both new and existing territories.
- Realise efficiencies from increased scale.
“A great team performance, acquisitions successfully integrated, and we serviced the increased demand from our customers during the lockdown period.”
Richard Huxley Managing Director
Fuels’ outstanding performance was a consequence of solid trading throughout the year with an improved product mix, the benefit of three acquisitions in 2020 and the full year impact of acquisitions completed in the prior year. In addition, there was a significant demand increase throughout lockdown which resulted in over 37% more deliveries than the prior year on a like-for-like basis. Leveraging the benefits of a newer, modern fleet the business was able to prioritise domestic customers as commercial demand fell during lockdown. At the same time the price of oil fell dramatically throughout March and April, enabling the business to pass on lower prices whilst strengthening margins.
Volumes rose 20.5% to 665 million litres (2019: 552 million litres), and revenue increased by 6.1% to £470.2 million (2019: £443.0 million) as a result of higher volumes more than offsetting lower oil prices. On a like-for-like basis (excluding acquisitions in the year) volumes were stable, but with a significantly increased proportion of heating oil. The average Brent Crude oil price in the year was $54 per barrel compared to $70 per barrel in the prior year. Oil hit a record low of $19 per barrel in April 2020. Headline operating profit was £11.0 million (2019: £5.6 million) as a consequence of increased volumes, both organic and from acquisitions, positive product mix and improved margins across the year. Net profits of 1.6 pence per litre highlight the one-off gain of approximately 0.6 pence per litre in the year as a result of the unprecedented fall in the oil price and the dramatic increase in demand for heating oil.
Good strategic progress has been made with three acquisitions successfully completed and integrated, Ribble Fuel Oils and Caldo (North West) and Darch (South West), expanding the depot network with six additional locations and adding 120 million litres to the volume of the division, an increase of over 20%. The Fuels division operates on a decentralised model with depot management teams focused on optimising performance for the specific conditions of their local market.
This model supported our ability to respond swiftly and effectively to the increased consumer demand and significant commodity price volatility experienced during lockdown. We continue to believe that our model is the most effective way to maximise performance, given the industry structure, but we also believe there are opportunities to leverage benefits from the breadth of our growing network. As such we continue to invest in enhancing systems and capabilities for the Fuels division which we believe will improve efficiencies and provide a strong platform for continued growth.
With over 116,000 customers (2019: 63,000) being supplied across 25 fuel depots in the year (2019: 19), Fuels operates in large and robust markets and as a business it has consistently proved it can effectively manage the impact of volatility in oil prices. The industry remains highly fragmented, with many small operators, which provides NWF with further opportunities to consolidate the market and increase share.