Financial Results (comparison to Pro forma 1H FY2017)
- Poultry volumes of 255kt, increased 2.8%
- Gross Profit of $243.1m, increased 6.1%
- EBITDA of $116.2m, increased 22.0%
- Underlying EBITDA of $108.9m, increased 14.8%
- Net Cash provided by operating activities excluding interest and tax of $128.4m, 110.5% of EBITDA
- Net Debt of $193.3m, leverage ratio of 0.9x
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 30 December 2017 (1H FY2018).
- Strategy implementation delivering benefits with growing volumes, earnings and strong cashflow
- Continued growth in Australian chicken and turkey volumes
- Rising energy and feed costs either offset via operational improvement or reflected in higher prices
- Improved New Zealand performance supported by growing poultry volumes and dairy feed demand
- Project Accelerate delivering improved yields, lower unit costs and improved asset utilisation with furtheropportunities identified
- Capital investment program on track, expanding capacity and improving efficiency
- Strong operating cashflow supported by targeted asset sales aligned to strategy implementation
Inghams Group Limited CEO Mick McMahon said “The results are pleasing and reflect both good progress on implementing our strategy and continued strong demand for Ingham’s quality products supported by
consumer preference for great value, healthy and versatile poultry products”.
Poultry volumes increased 2.8% despite cycling a number of customer EDLP initiatives in FY17, with core
Chicken and Turkey volumes up 3.7%. Revenue was down 1.7% reflecting the lagged effect of lower feed
prices (the major input cost) and reduced third party feed volumes in Australia as a result of increased focus on profitability in that segment.
Strong volume growth in New Zealand was driven primarily by growth in the Retail and QSR customer
segments and improved demand for dairy feed.
Gross Profit increased 6.1% to $243.1m supported by continued progress on Project Accelerate initiatives covering automation, labour productivity, procurement, network rationalisation and other initiatives.
The Accelerate program continues on schedule and the benefits are being realised in line with our
expectations, while further opportunities have been identified in areas such as Farming, Further Processing and Feed.
Underlying EBITDA increased 14.8% to $108.9m for the half, while EBITDA of $116.2m (including the net
effect of profit on sale and restructuring charges) increased 22.0%.
NPAT of $65.7m increased 28.1% and this included a one-off tax credit of $3.1m relating to the resolution of an historical tax matter.
Cash flow in the half was very strong benefiting from continued improvements in working capital management supported by asset sales, consistent with our strategy.
The capital program remains on track with spending lower than the comparative period and in line with
expectations. Major projects completed or underway include the expansion of our breeder farm network in Australia and New Zealand and a greenfield feedmill in South Australia. In February 2018 Inghams have
purchased a feedmill and opened a new DC in Queensland.
As a result of the strong cashflow Net Debt reduced to $193.3m with a leverage ratio of 0.9x.
“The business continues to make progress against the strategy demonstrated through its improved
operational and financial performance“ said Mr. McMahon. “It is very pleasing to see the progress we have
made reflected in continued volume growth and improved earnings, supporting strong cash generation and continued reduction in net debt. As a result, capital management options are under review.” he said.
The Board declared a fully franked dividend of 9.5 cents per share (record date 12 March 2018, payment date 6 April 2018).
The company reconfirms its dividend policy is unchanged with an intention to pay fully franked dividends of
65-70% of NPAT across the full year.
Strategy implementation remains on track with further opportunities identified and Accelerate benefits
expected to continue to underpin cost reduction, profit improvement and cash generation.
Cost increases in utilities and feed are expected to continue and, where they are unable to be offset, flow
through to price increases in the Australian market, while the New Zealand market dynamic remains
The first half is seasonally stronger than the second half (as we revert to a 52 week year).
Further asset sales are expected to offset ongoing restructuring costs in the second half as we continue to
implement our strategy and cashflow is expected to be strong.
Ingham’s is Australia and New Zealand’s leading integrated poultry producer supplying leading retail, quick service restaurants and food service customers, processing 4 million birds per week and employing
approximately 8,000 people. Ingham’s operations include 10 feedmills, breeder and broiler 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
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