15 February 2017
Inghams Group Limited (ASX: ING, Ingham’s), Australia and New Zealand’s largest integrated poultry
producer today announced its financial results for the half year ending 24 December 2016
Financial Results (and comparison to 1H FY2016)
Note: A reconciliation from Statutory NPAT to pro forma NPAT is included in the Appendix.
– first phase automation projects operational in Primary Processing plants
– closure of the Cardiff plant in NSW complete, and volumes transferred
– good progress on labour efficiency, procurement and other initiatives
– commissioned South Australia hatchery and breeder expansions
Ingham’s Group CEO Mick McMahon said, “The results for the Group are in line with prospectus
forecasts and reflect strong demand for Ingham’s quality products, with our customers continuing to
invest in chicken as the healthy and competitive protein.”
At a Group level total poultry volumes increased 12.9% for the period (9.0% for core chicken and
turkey lines, excluding ingredients), with stronger than expected growth in Australia, driven primarily
by growth in Retail and QSR customer segments as demand for chicken continues to grow compared
to other animal proteins given its affordability and versatility.
New Zealand volumes were flat in a challenging market, driven by reduced industry export volumes
translating to domestic oversupply.
Group Revenue increased 4.3% as a result of the increased volumes, feed cost deflation and changes
in sales mix.
Gross Profit increased 9.0% to $229.0M driven by volume growth and good progress on
implementation of Project Accelerate initiatives covering automation, labour productivity,
procurement, network rationalization and other initiatives. The program continues on schedule and
the benefits are being realized in line with our expectations in the prospectus forecast.
Pro forma EBITDA increased 9.1% to $95.2m for the half, while pro forma NPAT increased 13.8% to
Statutory NPAT was $9m reflecting the costs of IPO and restructuring initiatives previously disclosed.
While cash flow improved and inventory levels reduced for the half, working capital increased due to
revenue growth and the timing of the half year close impacting receivables, in line with expectations.
Net Debt reduced from the level at listing to $403.4m, despite capital expenditure peaking in the half,
and is expected to reduce further by end FY17.
Significant investment continues to be made in capacity expansion and capability, with the first stage
of Project Accelerate automation initiatives now complete. In South Australia, the expanded
Murraylands hatchery is operational, the addition of breeder capacity is progressing to schedule and
work has commenced on the construction of a new feed mill.
The company has continued to strengthen key areas of operations, marketing, category management
and NPD in support of its strategy.
The Board declared a fully franked ‘stub’ dividend of 2.6 cents per share (record date 10 March 2017,
payment date 5 April 2017). The dividend represents 65% of post IPO NPAT.
“It has been a very busy period with strong volume growth, implementation of major changes and
significant capital investment, all occurring while transitioning to a publicly listed company. It is
pleasing to see the progress made reflected in improved financial performance,“ said Mr. McMahon.
The company reconfirms that its FY17 prospectus forecast of $98.8M pro forma NPAT is expected to
be achieved based on the current trading outlook.
Australian volume growth is expected to moderate as we cycle a number of EDLP initiatives by
customers in the second half, and will be broadly in line with the prospectus forecast for the full year.
Progress continues on extending key customer contractual coverage. One key QSR customer
agreement remains under negotiation.
New Zealand trading conditions are likely to continue in the second half.
Project Accelerate implementation and investment is continuing and expected to contribute to
earnings growth over future years. Capital expenditure will reduce in the second half.
Pro forma net cashflow expected to be in line with prospectus forecast, reflecting strong second half
cashflow, further reducing net debt and leverage.
The company reconfirms its intention to pay fully franked dividends of 65 – 70% of pro forma NPAT.
Ingham’s is Australia and New Zealand’s leading integrated poultry producer supplying leading retail,
quick service restaurant and food service customers, processing 4 million birds per week and
employing more than 8,000 people. Ingham’s operations include 10 feedmills, breeder and boiler
farms, 11 hatcheries, seven primary processing plants, seven further processing plants and nine
distribution centres. Ingham’s was founded in Sydney in 1918 by Walter Ingham and listed on the
Australian Stock Exchange in November 2016.
M: + 61 (0) 455 372 311