Chicken producer Tegel expects growth to be bolstered by a major brand refresh, product launches and entry into new export markets, after beating forecasts in its first result as a publicly listed company.
New Zealand's biggest poultry firm yesterday reported net profit of $11.3 million for the year to April 24, a 29.5 per cent lift on the same period a year earlier and $1.3 million ahead of the $10 million forecast in the initial public offering prospectus.
The Auckland-based company said revenue rose 3.5 per cent to a record $582.4 million, which was also $1.3 million ahead of the forecast. Tegel's financial year ended nine days before the firm listed on the NZX and ASX on May 3.
The company said it was "well positioned" to meet guidance for the current financial year, in which profit is forecast to more than triple to $44 million, setting the firm up to pay a dividend of between 7c and 11c a share. No dividend was declared for the 2016 year, as expected.
Shares in Tegel, which entered the S&P/NZX 50 last Friday, closed down 1c at $1.67 last night, 7.7 per cent above their $1.55 initial public offering price.
"It's good to see them meet and exceed their targets as per the IPO," said Harbour Asset Management's Shane Solly. "It's always good to see a company actually deliver that."
Tegel chief executive Phil Hand said the rollout of the new branding would begin in New Zealand supermarkets in August or September.
"It's been about 12 years since we've refreshed the Tegel brand so it's quite an exciting chance for us and we're looking forward to getting it done," Hand said.
He said 10 products, including new free range items, would be launched during the first half of the financial year.
"We've got a nice little mix of products coming through on the back of the brand refresh," Hand said.
A growth push in new export markets was a major selling point of the IPO.
Yesterday, Tegel said it had met with customers and presented new products in the Philippines and Japan since the listing, while market access had been opened in Bahrain and South Africa.
Hand said the company was confident it could pull off its export strategy and he expected it to enter at least two of those four new markets in the current financial year.
"We've grown our export business significantly over the last five years and certainly even last year we were up about 14 per cent," he said.
"We've got the New Zealand Inc story sitting behind us and New Zealand chicken is the most disease-free in the world, which gives us a really unique platform to sell our products on the world stage."
"It's been about 12 years since we've refreshed the Tegel brand so it's quite an exciting chance for us and we're looking forward to getting it done."
Tegel, which has a roughly 50 per cent share of the local market, said strong domestic revenue growth in the year to April 24 had been driven by general market demand and two significant new supply contracts.
Export sales, meanwhile, had been strong in Australia, the Pacific Islands and United Arab Emirates.
Capacity improvements and efficiency gains had contributed to a rise in the gross profit percentage from 23.6 per cent in the 2015 financial year to 25.3 per cent in 2016.
The IPO, backed by Asian private equity firm Affinity Equity Partners, raised $284 million, of which $130 million went to pay external debt.
The company said the post-listing debt reduction provided flexibility for growth in the current year and beyond.