Today Inghams Group Ltd (ASX: ING) shares fell 5% after it released half-year results to the market with underlying net profit after tax (NPAT) down 5.3% to $55.4 million.
Inghams is an integrated poultry producer operating in the Australia and New Zealand markets.
Key Results
Inghams reported:
- Core Poultry volumes increased 3% to 207.5kt
- Underlying EBITDA up 3.6% to $109.6 million
- Underlying NPAT down 5.3% to $55.4 million
- Cash flow from operations $102.8 million
- An interim dividend of 9 cents per share (cps) fully franked
During the year, Inghams divested of its horse feed business Mitavite booking a pre-tax profit of ~$50 million which has been excluded in the underlying results. This was partially offset by restructuring initiatives of $11.4 million and impairment of $2.3 million which were also excluded from underlying results.
Management Commentary
Inghams CEO Jim Leighton said, “the results are pleasing and reflect further progress on our strategy implementation and the continued demand for Ingham’s quality products”.
Mr Leighton mentioned the impact of the drought conditions in Australia, saying, “the first half saw significant cost increases relating to feed driven by the drought conditions in Australia and while every effort was made to offset these increases through internal initiatives, ultimately these were passed through to the market”.
Share Buyback
Inghams reaffirmed an on-market share buyback announced in December using the proceeds from the sale of Mitavite business. The company expects to buy back up to $50 million worth of shares.
Outlook
Inghams stopped short of providing any guidance on numbers. However, it said it expects demand to “grow at historical levels” and expects feed costs to remain high until December. It also continues to implement Project Accelerate to try and gain efficiencies which is expected to be completed by the end of the current financial year.
Rask Perspective
Inghams is a company that has little pricing power for its products. As such as I have no interest in adding this stock to my portfolio for the long run, especially when we consider there are 2,000+ other shares on the market.
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