The Inghams Group Ltd (ASX: ING) share price is up more than 6% after the business revealed a stronger-than-expected update.
Inghams egg-ceptional update
The poultry business has given an update about its year-to-date performance and its understanding of the market’s earnings expectations for FY21.
Based on this assessment of consensus estimated and taking into account current operating performance, the company has formed the view that its forecast EBITDA (EBITDA explained) may exceed and forecast statutory net profit after tax (NPAT) may materially exceed, the market’s expectations.
New earnings guidance
Including the AASB 16 lease accounting changes, statutory EBITDA is now expected to be in a range of between $438 million to $448 million. Statutory net profit after tax is expected to be in a range of $80 million to $87 million.
For ease of comparison for some investors, Inghams also included the profit guidance of a pre AASB 16 basis. The underlying EBITDA guidance is a range of between $203 million to $213 million. Looking at the underlying net profit guidance, it’s a range of between $96 million to $103 million.
It shows how much these profit numbers can be changed by the accounting standards.
What influenced this guidance?
Inghams said that it has taken into account its current operational performance, the benefits derived from operational efficiencies implemented throughout the year and an assessment of potential operating results in the final five weeks of FY21.
There has been an improvement in general trading conditions as the impact of COVID restrictions have decreased over the last six months (not taking into account the just-announced Victoria lockdown).
Inghams also received a R&D tax credit relating to the prior financial year.
Summary thoughts on the Inghams and the share price
Inghams is doing well in the current environment and it’s expecting a solid FY21 it seems. I think that poultry demand will continue to rise and if there is stronger inflation that should lead to higher revenue for the company.
If investors are looking for a combination of income and a bit of capital growth, Inghams could be a decent choice. There are a number of ASX dividend shares to consider for income.