Tegel profit forecasts affirms targets for 2017

Tegel Group Holdings, the poultry group taken public by private equity firm Affinity Equity Partners in April, reported annual sales and profit that beat its prospectus forecasts and said it was on track to achieve its targets for the current year.

Profit was $11.3 million in the year ended April 24, from $8.7 million a year earlier, the Auckland-based company said in a statement. Sales rose to $582 million from $563 million.

The company had forecast profit of $10 million and sales of $581 million in its prospectus. The company's financial year ended nine days before its listing.

New Zealand's biggest chicken producer said it is "well positioned" to meet its 2017 targets, having forecast profit to more than triple to $44 million on a jump in sales to $637 million, allowing the company to pay a dividend of between 7 and 11 cents per share.

The shares are little changed from their NZX debut on May 3, having last traded at $1.68, or 8.4 percent above their initial public offering price. Domestic revenue growth "was driven by general market demand, in addition to securing two major supply contracts during FY2016," the company said.

"Export sales were strong in Australia, the Pacific Islands and UAE, with the FY2016 launch into the food service channel in UAE providing incremental revenue gains".

"Revenue growth continues to be driven by strong, growing demand for poultry as a meat protein in New Zealand and globally, and record sales in Tegel's key export markets," it said. "Underlying poultry consumption continues to increase, driven by population growth and share of plate gains."

Tegel raised $284 million in its IPO, of which $129 million went to repay the existing shareholders, $130 million to repay external debt and $23.3 million on IPO and listing costs and an expensed management bonus.

The company retained $1.2 million. Tegel was taken public by its second private equity owner after Affinity acquired Tegel in a leveraged buyout from Pacific Equity Partners and ANZ Capital in early 2011. PEP had, in turn, bought Tegal from HJ Heinz in 2005.

Tegel processes about half of all New Zealand's poultry in a market where its only competitor of scale is No. 2 ranked Inghams, owned by private equity firm TPG. Smaller players include Brink's and Turk's, and the four companies have about 98 percent share of the New Zealand market.