Company Interview / Inghams hatching a recovery after profit decline

Key points:

Inghams (ASX:ING) posts 10% profit drop, strong underlying EBITDA amid transition Cost-of-living pressures and Woolworths contract impact offset by cost controls Strong focus on replicating New Zealand business success in Australia Positive long-term outlook with ongoing investment and acquisition opportunities

Ed Alexander of Inghams expresses confidence in the company’s underlying business strength, highlighting a full-year underlying EBITDA of $236.4 million amidst a period of significant transition. While Inghams (ASX:ING) reported a 10% drop in full-year profit to just under $90 million and a 1.5% revenue decline to $3.2 billion, Alexander points to tight cost controls and feed cost savings as offsets to the impact of Woolworths transitioning its supply contract and softer retail demand in the final quarter.

Alexander attributes the short-term dip in consumer demand to broader cost-of-living pressures but expects recovery as economic conditions improve and rate cuts come into effect. He calls attention to continued strong demand fundamentals for poultry as a versatile and affordable protein and stresses the importance of building supply-demand discipline and customer centricity. Macquarie’s view that New Zealand operations are a bright spot is acknowledged, with Alexander confident that successful strategies from New Zealand can be replicated in the Australian market.

Addressing quick service restaurant volumes, Alexander notes only a slight decline and sees growth potential among emerging QSR operators. Capital expenditure is projected between $80 and $100 million over the coming year, with ongoing interest in potential acquisitions. Alexander also confirms active engagement with the ATO regarding R&D tax offsets and underlines a strong long-term outlook for investors.