NWF Group Stock Plunges After Issuing Profit Warning as Fuels Performance Drags Down Outlook

NWF Group plc (LON: NWF) shares plunged on Friday after the company tempered expectations for the financial year ending May 31, 2026, citing a significant downturn in its Fuels business.

The specialist distributor anticipates full-year results will fall considerably short of current market forecasts due to lower demand and margin pressures in the fuel sector.

The primary culprit is a marked decrease in demand for both domestic heating oil and commercial fuels. Data from the Department for Energy Security and Net Zero (DESNZ) indicates heating oil volumes were down 25% in the three months to August 2025 compared to the previous year.

Warmer-than-average autumn temperatures are largely to blame for this decline, and while a winter rebound is expected, it won't be enough to offset the first-half shortfall.

Commercial diesel and gas oil demand has also weakened, further impacting the Fuels division. Notably, gas oil, a higher-margin product for NWF, experienced an almost 30% volume decrease according to DESNZ data. This suppressed demand has intensified competition, leading to pricing pressures and reduced profitability.

The company's national rollout of the Fuels regional operating model, completed in July, has presented short-term challenges amidst these difficult market conditions. The operational change has created some short-term challenges as the business embeds the new operating model. While the investment is expected to yield commercial and operational improvements later in the year, the immediate impact is weighing on performance.

Conversely, NWF's Food business has shown resilience. New contracted business and the benefits of cost-base restructuring undertaken in June 2025 have driven financial performance ahead of the comparative period. Management’s focus remains on efficiency gains and expanding its national network.

The Feeds business continues to perform well, maintaining the positive momentum reported earlier in the year. Volumes are in line with the previous year, and healthy margins have been sustained as the business enters its traditionally busier period. Stable milk prices have encouraged farmers to maximize yield, benefiting the Feeds division.

Despite the current headwinds, the medium-term outlook for domestic heating oil offers some optimism. The UK government's decision to abandon proposed regulations restricting fossil fuel heating installations in off-gas grid properties provides a degree of certainty.

NWF’s financial position remains strong, and the Board expresses confidence in its medium-term prospects. The company will continue to pursue its sustainable growth strategy, focusing on targeted acquisitions, growth investments, and business improvement initiatives, all supported by a robust balance sheet.

NWF expects to announce its results for the half-year ending November 30, 2025, in early February 2026.

Analyst consensus forecasts as of November 20, 2025, projected a headline operating profit of £17.9 million and a headline profit before tax of £13.2 million. The company's warning suggests these figures are now unlikely to be met.