Poultry business Inghams Group posted a strong recovery in FY23, paying down debt and increasing revenue by 12 per cent on the prior corresponding period.
Snapshot
- EBITDA of $418.5m, up 13.0% pcp;
- NPAT of $60.4m, up 72.1% pcp; and
- Poultry sales volume 463.5, down 0.4%.
The company’s 12.2 per cent revenue increase was mainly due to higher net selling prices (NSP) in response to the increased underlying total costs (up 11.9 per cent on pcp) over the period.
Inghams managing director and CEO Andrew Reeves said cost inflation was being seen across key inputs with feed, fuel, freight, ingredients, cooking oil, and repairs and maintenance exceeding general inflation.
Reeves said: “Our FY23 results demonstrate the breadth and momentum of the operational recovery underway across the business. I am very pleased with the strong recovery, underpinned by the progressive return to normal operational performance levels across the business, with farming performance continuing to recover and supply chain conditions normalising.
“Overall, the poultry sector remains attractive, underpinned by robust demand with key long-term trends intact. Our underlying business is in good shape, and our diverse network and integrated operating model provides a strong platform for earnings growth.”
The decline in core poultry sales volume (0.4 per cent pcp: Australia down 0.6 per cent; New Zealand up 0.8 per cent) was mainly because a lower number of birds were processed in 1H. In Australia this was because of a decline in farm performance; in New Zealand it was because a lower egg setting was implemented to address the impact of labour-related processing constraints and reduced further processing production driven by the nation-wide shortage of CO2. New Zealand volumes recovered in 2H.
Cash flow from operations was $371.9 million, which was flat versus pcp.
“The significant improvement in trading results partially offset by spend on business transformation and an increase in working capital,” Inghams said.
There was a $97.8 million increase in the cost of feed as well as increases to other inputs.
Net debt declined 1.8 per cent pcp to $262.5 million due to the significant improvement in operating earnings and despite the increase in working capital requirements during FY23, the company said.
As a result, earning improvements, Inghams’ leverage ratio declined significantly to 1.4 times at 24 June, comfortably within the target range of 1.0x – 2.0x.
Reeves said the company is focused on ensuring the business is well positioned for long-term growth.
