Inghams HY23 earnings down 11pc on HY22

Grain Central February 20, 2023

Inghams is anticipating that earnings and profit will recover in coming financial years.

AUSTRALIA’S major poultry producer, Inghams Group, has indicated the company is on the recovery path, despite reporting an almost 11pc drop in earnings for the half year ending 24 December 2022.

On Friday, Inghams announced earnings before interest, taxes, depreciation and amortisation of $197M for HY23, down from $220.4M in HY22.

Net profit after tax fell 55pc from $38.4M in HY22 to $17.2M.

Group core poultry volumes were slightly lower than prior period, down 0.6pc, with 235,700t processed in HY23 compared to 237,100t in the previous corresponding period.

The company also reported a drop in external feed volumes from 168,900 tonnes in HY22 to 155,900t in this half.

This result was due to customer’s transitioning away from the Western Australian feed mill before its closure and a reduction in feed availability for external sales in New Zealand.

Inghams CEO and managing director Andrew Reeves said, while the HY23 results were a decrease from the HY22 figures, there were improvements from the previous half.

Andrew Reeves

“Our results for the first half represent a significant improvement for the business over second half of FY22, and we expect this positive momentum to continue as we proceed through the second half of the financial year,” Mr Reeves said.

“While it is clear the business is successfully transitioning from the various operational challenges experienced over the past 12 months, our farming operations are taking longer to return to normal levels, resulting in lower than required poultry volumes.

“We also continue to manage a number of general market headwinds including supply chain disruptions and broad inflationary pressures, that are a feature of the current operating environment.”

He said Inghams was seeing some benefits from price increases introduced during the previous half to counteract added costs for feed, fuel and freight.

This has resulted in a total poultry average selling price growth of 8.5pc and will go some way to mitigate the increase cost of sales of 10.9pc.

Feed prices stabilise

Inghams chief financial officer Gary Mallett said the higher feed costs among other increases in pricing has hit the company’s bottom line, but he hoped the situation is stabilising.

“Overall we have seen feed prices have stabilised more recently; however, they remain very elevated versus historical levels,” Mr Mallett said.

“During the first half, wheat prices were fairly flat and, in Australian dollar terms, soy market pricing has increased by 6pc during the half.

“Wheat and soy prices are up significantly versus [prior corresponding period] rising 19pc and 33pc respectively over that period.”

Mr Mallett said rain and flooding across eastern Australia appears to have only caused minor crop damage, “thus limiting the potential for price discounts for lower quality wheat”.

The project is expected to produce approximately 700,000 eggs per week when fully operational. Photo: Inghams

Breeder triangle progresses

Inghams reported further investments for the company’s network in HY23, including progress with its northern New South Wales “breeder triangle”.

Located in the Casino area close to existing breeder farms, the $30M project features the construction of one rearing farm and two egg-producing farms.

Mr Reeves said the Yorklea rearing farm was now operational.

“[The] first egg-producing farm is due to commence operations in April of this year, followed by the second production farm in November.

“The triangle will service the Queensland market as an important part of growing our capacity and enhancing the overall resilience of the network.”

New Zealand investment

Last week, Inghams entered into an agreement for the conditional purchase of the New Zealand poultry meat business and assets of Bromley Park Hatcheries for NZ$8.6M.

The deal involves a third-party lessor acquiring land and facilities, which will enter into a long-term lease with Inghams.

BPH owns and operates a number of breeder farms as well as a hatchery in NZ and is currently used by Inghams as a third-party supplier of Day Old Chicks (DOC).

The purchase is expected to settle in the first quarter of FY24.

The acquisition provides the opportunity for Inghams NZ to become self-sufficient in respect of its DOC requirements and also reduces network risk.

Source: Inghams



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