Inghams FY26 Underlying EBITDA Pre AASB 16 Down 21.2%

Inghams (ASX:ING) Group reported FY26 underlying EBITDA pre AASB 16 of $186.4 million, down 21.2% on the prior corresponding period and within its guidance range of $180.0 million to $200.0 million. Underlying EBIT was $153.6 million, down 30.0%, and as-reported net profit after tax was $34.6 million, down 61.5%, which the company said was due to lower operating earnings and the inclusion of a $12.7 million tax provision. Inghams has lodged an objection to an amended Australian Taxation Office assessment relating to research and development tax offset claims paid for the 2019 to 2021 financial years and said it intends to defend its position. Group revenue increased 2.4% to $3,227.4 million, driven by core poultry volume growth of 1.9% to 470.1 kilotonnes and a 1.4% increase in core poultry net selling prices to $6.40 a kilogram. Revenue growth was more than offset by a 6.2%, or $169.9 million, increase in total costs; adjusting for volume growth, total cost growth was 4.1%, which the company said reflected inflationary pressures across packaging, ingredients, cooking oil, freight, labour, and repairs and maintenance. It said the Middle East conflict contributed additional costs of $13.2 million, which its key points describe as a net impact of $4.7 million after significant recovery of those incremental costs, while a cost reduction program delivered $82.3 million of savings and internal feed costs were $27.6 million lower than the prior corresponding period.

Australian revenue increased 3.5% to $2,732.0 million on core poultry volume growth of 2.0% and a 2.4% increase in net selling prices to $6.50 a kilogram, with quick service restaurant volumes up 4.7%, food service up 10.3% and retail up 1.3%, and retail volumes excluding Woolworths up 17.2%. New Zealand core poultry volumes rose 1.5% and net selling prices increased 1.4% to NZ$6.81 a kilogram, supporting local currency revenue growth of 2.0% against a decline of 3.3% in Australian dollar terms, which the company attributed to a strengthening Australian dollar. Cash conversion increased 8.6 percentage points to 105.5% and net debt fell $27.1 million to $403.3 million, leaving year-end leverage at 2.2 times underlying EBITDA pre AASB 16, above the company's policy range of 1.0 to 2.0 times. The board declared a fully franked final dividend of 6.1 cents per share, a payout ratio of 70% of underlying NPAT, and established a dividend reinvestment plan; FY26 fully franked dividends totalled 10.1 cents per share, down 8.9 cents or 46.8%. For FY27 the Group is transitioning to underlying EBIT as its primary earnings measure and expects underlying EBIT post AASB 16 of $155.0 million to $180.0 million, equivalent to underlying EBITDA pre AASB 16 of $190.0 million to $220.0 million, on assumptions that include core poultry volume growth of 2.5% to 4.0%, $30 million of additional transport and packaging costs associated with the Middle East conflict, $40 million to $50 million of higher feed input costs based on current market conditions and expected volumes, and capital expenditure of $80 million.