Inghams shares dive as analysts expect FY25 downgrades
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More news: Inghams shares dived in morning trade on the ASX as analysts anticipate consensus downgrades for FY25 as the poultry supplier posted a weaker-than-expected outlook.
Inghams shares tumbled 19.4% to $3.12 by 11:20am AEST.
E&P Capital retail analyst Phillip Kimber said he expects Inghams' FY24 result and below-consensus guidance for FY25 to drive consensus earnings downgrades of around 7% to 10%.
Jarden analysts said that FY25 guidance implies a 5% cut to consensus, in large part driven by the new Woolworths contract which will see Inghams remain Australia's biggest poultry supplier, but with a phased reduction in volume.
What they said: "Result is ok and quality good with cash flow strong," Jarden analyst said.
"However, focus will be on the changed terms of the [Woolworths] contract and specifically magnitude of volume lost, ability to still monetise growth in value-added product and work done to date to offset the lost volume," they said.
Inghams Group reports profit jump but misses forecasts
The news: Australia's largest poultry producer Inghams Group reported a jump in full-year profit, but failed to meet analysts' expectations and set cautious FY25 guidance due to ongoing pressures from inflation.
The numbers: Inghams reported net profit after tax of $101.5 million, up 68% year on year, but short of consensus estimates of $108.5 million, according to Visible Alpha estimates.
EBITDA grew 12.6% year on year to $471.1 million as poultry sales volumes increased 2.8% and the net selling price added 5.4%.
The company declared a total dividend of 20 cents per share, up from 14.5 cents last year.
Inghams expects poultry volume growth to lower 1% to 3% in FY25, and guided underlying EBITDA of between $236 million to $250 million, representing up to flat to 6% growth.
The context: Inghams noted consumer conditions in the near term are expected to "remain challenging" due to cost-of-living pressures, with inflation expected to remain elevated during FY25.
Core poultry volume is forecast to be lower in in FY25 due to the phased introduction of a new Woolworths supply agreement and the ongoing effects of cost-of-living pressures on consumers, the company said.
Meanwhile, Inghams aims to deliver annualised cost savings through procurement, operational and continuous improvement initiatives over the coming year, with the aim of offsetting general inflationary effects.
What they said: Inghams CEO and managing director Andrew Reeves said: "Our strong results are underpinned by volume growth, improved margins, and good cost control and operational outcomes across both farming and processing."
"The key long-term fundamentals supporting the poultry sector remain in place, with poultry continuing to be the affordable protein of choice for consumers," he said.
The sources: ASX announcement, Jarden research, E&P Capital research
