Can Inghams Group overcome cost pressures in the 2H?
Inghams shares have tumbled on Friday after reporting disappointing earnings but can the poultry producer make a strong recovery ahead?
Inghams Group Limited (ASX: ING)
Inghams Group Limited fell 16% on Friday at the time of writing after the poultry producer reported much lower interim earnings and cut its full year guidance.
The current market capitalisation is $758.23 million and the drop was mainly due to higher operating costs in Australia across farming processing and supply chain activities.
Group revenue was flat at $1,610.3 million while EBITDA dropped 33.8% year-on-year to $139.2 million and net profit after tax fell 64.9% to $18.1 million which shows margin pressure.
The company reduced its underlying EBITDA for FY26 to $180 million to $200 million which is lower than the earlier range of $215 million to $230 million because of weaker performance.
The valuation has been heavily affected as the stock has fallen 36.65% over the past 12 months and management stated that the downgrade reflects slower operational recovery rather than weak structural demand.
Net debt rose to $466.1 million and leverage increased to 2.4 times which is above the company’s policy range because of lower earnings and ongoing capital expenditure.
Inventory levels have declined and production settings have returned to normal into the third quarter which should lift network efficiency.
Wholesale pricing has started to recover and feed input costs such as wheat and soy have eased which may reduce cost pressure in the second half.
The company expects earnings to be more weighted towards the second half because farming productivity has improved supply chains have stabilised and wholesale pricing has strengthened.
Cost reduction plans that target annual savings of $60 million to $80 million are underway which may help margins recover further.
If execution improves through the rest of FY26 then Inghams may achieve a strong rebound in FY27 as cost pressures ease and volumes stabilise.
(Source: Company Announcements)
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