Ingham's posts 2.5 per cent gain in FY earnings in NZ

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Ingham's Group, which is the number two poultry producer in New Zealand behind Tegel Group, reported a 2.5 per cent gain in New Zealand earnings, saying trading improved in the second half after a weak first half and the trend has continued into the 2018 year.

Earnings before interest, tax, depreciation and amortisation at the company's New Zealand unit rose to A$36.2 million (NZ$39.2m) in the 53 weeks ended June 30, from A$35.3m a year earlier, according to the Sydney-based company's annual results. New Zealand revenue climbed to A$361m from A$353.5m.

New Zealand earnings were below Ingham's prospectus forecast of A$37m and reflected a difficult first half when rival Tegel cited a glut of chicken in the market and rising freight costs that were squeezing margins. Tegel's year-end was April 30 and it posted a 0.8 per cent gain in ebitda even as sales rose 5.4 per cent to a record $614m. Today Ingham said stronger trading conditions were prevailing in the current year, which may signal supply and demand are returning to balance.

The company said it enjoyed "strong" sales of free-range chicken sold under its Waitoa brand and began sales of Waitoa products to Hong Kong. Third-party chicken feed sales were in line with expectations while dairy feed volumes were "improving on the back of milk price recovery".

Ingham's listed on the ASX last November and provided pro-forma figures for its operations for 2016 and 2017. Total revenue climbed 3.3 per cent to A$2.4 billion and ebitda rose 16 per cent to A$195m. The company declared a final dividend of 9.5 Australian cents a share.

The improved trading was driven by Australia, where sales rose 3.4 per cent to A$2.02b and ebitda jumped 20 per cent to A$158.8m, beating its IPO forecast of A$153m.

"Overall poultry volumes increased 11.5 per cent with stronger-than-expected growth in Australia and improving New Zealand volume growth in the second half," chief executive Mick McMahon said in a statement.

Commenting on the outlook, McMahon said: "Continued growth in poultry volumes is expected".

"The effect of increasing feed prices over recent months is expected to be mitigated by forward cover arrangements, feed cost pass-through mechanisms with customers and market recovery of increased prices over time," he said. Some further assets sales were expected while capital expenditure was likely to reduce from its 2017 peak.

Ingham's said it has begun a strategic review of its commercial stock feed business.
The company's shares last traded at A$3.50 on the ASX and have gained 7 per cent in the past six months. US private equity firm TPG floated the business at A$3.15 per share.