At 35.3 million Australian dollars (AUD; US$27.9 million), Inghams Group Ltd. achieved a 35% year-on-year increase in net profit after tax for the first half of its 2021 financial year. This improvement was achieved despite the challenges of COVID-19, an avian influenza outbreak in one Australian state, and higher feed prices.
According to managing director and CEO Jim Leighton, the results for the period ending in December 2020 were driven by resilience in demand, and strategic initiatives that delivered operational momentum.
At 224,600 metric tons (mt), the group’s poultry volume was 4% higher than in the same period of the previous reporting year. Compared with the previous half-year, it was 5.6% higher.
This increase in core poultry volume reflects solid demand from all four sales channels — retail, QSR, food service, and wholesale — the firm reports. These positive impacts were slightly off-set by reduced exports. Some of the company’s export markets closed to Australian imports after avian influenza was detected in the state of Victoria in July and August of 2020.
Despite reduced feed sales to third parties, Leighton highlighted the group’s 4.6% increase in revenue for the half-year to AUD1.363 billion. This contributed to a 5% increase in Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA).
How COVID-19 impacted Inghams’ results
In the first quarter of the period, Inghams’ business was more impacted by lockdown restrictions linked to the coronavirus COVID-19 pandemic than during the subsequent quarter, according to Leighton.
However, lessons learned during the first COVID wave were applied during the second wave, he said. As a result, the firm was better placed to meet customer demand and to ensure continuity of supply.
Engaging with the government, the group was able to influence the restrictions implemented for the meat processing sector while maintaining a safe working environment. It introduced a split rota system, measures to physically separate workers, and additional sick leave benefits.
Group’s business segment performance, investments
Overall revenue growth of 4.6% reflected the continued demand for poultry offset by lower external feed revenue and volumes, reported chief financial officer Gary Mallett.
Compared to the same period of last year, Australian operations delivered a 5.2% increase in revenue at AUD1.16 billion. At 239,000mt, total poultry produced was up by 5.0% year-on-year. While feed volume was down by 13.6% at 126,000mt.
Overall revenue for Inghams’ New Zealand business was AUD203,000, which is 1.2% above the previous comparable period. Total poultry production was 3.6% higher at 40,100mt, while feed volume was 63,400mt, a year-on-year reduction on 12.6%.
Compared to the first-half of the previous year, revenue from the group’s poultry business was up by 6.1%.
Half-year core poultry volume was up 4.0% year-on-year at 224,600mt, while total poultry volume was up by 4.8%at 279,400mt.
In contrast, third-party feed sales for the period were 189,400mt. This is 29,000mt or 13.3% lower than in the previous comparative period. Also contributing to lower feed sales were favorable pasture conditions in New Zealand, Mallett reported.
Group capital investments were restricted by COVID-19. However, among the major items reported were AUD22.3 million on hatcheries in the states of Victoria and Western Australia, and AUD2.1 million on the expansion of the further processing plant in Auckland, New Zealand.
Inghams’ outlook for 2021
Continued operational momentum is forecast by Inghams in the coming months.
The firm expects the net impact of lower feed prices to be modest during the second half of the financial year. This is based on the recent surge in international demand as well as its customer cost pass-through mechanisms.
Reduction of surplus inventory is set to continue, and the sale of the group’s feed mill in Hamilton, New Zealand, is expected to be completed next month.
If the absence of avian flu in Australia continues as expected, the firm hopes that its export markets will soon be restored.
More on Inghams Group
In September of last year, the death was announced of Bob Ingham. With his brother Jack, he built up their father’s business to become Australia’s largest chicken and turkey producer.
According to WATTPoultry.com’s Top Poultry Companies database, Inghams Enterprises Pty. Ltd. supplies about 40% of the Australian poultry meat market. the firm operates more than 340 vertically integrated facilities across Australia and New Zealand. It operates 74 breeding farms, 225 broiler farms and nine distribution centers, in addition to numerous feed mills, hatcheries, processing and further processing plants. As one of Australia’s largest feed producers, Inghams makes feed for horses, dairy cows and pigs, as well as poultry.
