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Inghams HY24 profits up 268pc

Grain Central, February 19, 2024

AUSTRALIA’S largest poultry company, Inghams Group, has reported net profit after tax of $63.4 million for the half year ending December 23, an increase of 268 percent on HY23.

This impressive result was driven by increases in net sales prices in FY23 and early into FY24, which rose 8.5pc.

The business reported earnings before interest, depreciation, taxation and amortisation of $253.7M, up 28.8pc on HY23.

The results are a positive step for Inghams, which reported drops in NPAT of 55pc and EBITDA of 11pc in HY23.

Inghams CEO and managing director Andrew Reeves said the results show the company “is performing well and provides a strong platform for future earnings growth”.

“Our interim results reflect the benefit of the price increases that were applied during FY23 and early FY24 in response to a significant growth in costs, modest volume growth, improved margins and the continued improvement in operational performance in both farming and processing,” Mr Reeves said.

Poultry volumes increased slightly in HY24.

Core poultry volumes increased a modest 2.2pc from 235,700 tonnes in HY23 to 240,800t in HY24.

In Australia, volume grew 1pc, and reflects a shift in channel mix as consumers responded to cost-of-living pressures through increased demand for in‐home dining and convenience products.

As a result, retail volume experienced strong growth of 9.3pc, which was substantially offset by a reduction in quick-service restaurant and other out‐of‐home channels.

Feed volumes down

Inghams chief financial officer Gary Mallett said external feed volumes dropped by almost 15pc from 155,900t in HY23 to 133,000t in HY24.

“The closure of the Wanneroo feedmill in Western Australia in April of last year has seen the external feed volumes decline as we had previously flagged,” Mr Mallett said.

He said underlying costs grew 6.9pc or $89M.

“Feed costs represented $11M of this amount increase due to the combined effects of grow in volume and a slow increase in Australian feed unit costs.”

This was in line with an estimated 2pc increase in domestic feed cost in Australia.

Other costs increased $78.3M or 8.5pc due to volume and inflation, partially offset by efficiencies and an improvement in operational performance.

Mr Mallett said feed costs was Inghams’ largest expense, with global wheat and soymeal prices having a substantial impact on the company’s performance.

He said feed prices began to stabilise during FY23 following “a sharp increase in earlier periods”.

“Overall global pricing for wheat and soymeal have been moving a little lower since FY23 with improving production for both inputs as the northern hemisphere conditions improves.

Mr Reeves said the company was predicting feed costs to moderate in the following financial year.

“The pricing of key feed ingredients has stabilised, noting that Australian wheat pricing has been adjusting at a slower rate than international pricing.

“Based on the current market pricing we anticipate some benefit from lower key feed costs in FY25, while feed costs expect to remain elevated versus long term levels.”

Projects, acquisitions

Mr Reeves said Inghams reached several key milestones in HY23.

“During the period we completed the opportunistic acquisition of the Bolivar processing plant in Adelaide and the Bromley Park Hatcheries business in New Zealand.

“The previously announced automation program is progressing well with installation and commissioning of all four leg de-boning machines completed in December ahead of both schedule and budget.”

He said a new distribution centre at Hazelmere in WA became operational in January.

“The Hazelmere [distribution centre] is the third of a three-facility investment program that has seen us open new distribution centres in Truganina, Victoria and Edinburgh Parks, Adelaide in August 2022 and April 2023 respectively.”

Inghams’ estimates that it procures over 1.2 million tonnes of grain each year.

The company operates over 90 sites in Australia and New Zealand including feedmills, farms, hatcheries and distribution centres.

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