The Ridley Corporation Ltd (ASX: RIC) share price may be a big mover today after the company released its FY19 results on Friday after market close.
About Ridley
Ridley is an Australian company engaged in the production and marketing of animal nutrients, ingredients and feeds for the production of food from livestock. The company was formed and listed on the ASX in 1987.
The Numbers
Ridley reported revenue from continuing operations growth of 9.2% to $1.002 billion and net profit after tax (NPAT) of $23.565 million, up 35.4%.
Basic earnings per share increased from 5.7 cps to 7.6 cps.
EBITDA was down from $55.3 million to $54.3 million, while an increase in depreciation and amortisation costs saw EBIT decline from $43.3 million to $40.5 million.
Another factor affecting the result was lower poultry tonnes due to shorter bird life throughout the industry (meaning less feed), improved feed conversion ratios, and the non-renewal of a supply agreement with Inghams Group Ltd (ASX: ING).
Positive year-on-year earnings growth was recorded for the Dairy, Beef and Sheep, Laverton Rendering, Supplements and Packaged Products segments.
Looking at the balance sheet, net debt increased by $48.6 million to $101.4 million due to a capital investment program to construct two new plants. This results in a gearing ratio of 36.6%, up from 20.1% in 2018.
Dividends
The Ridley Board declared a fully franked final dividend of 2.75 cents per share, the same as the FY18 dividend. This brings the total dividend to 4.25 cps, giving Ridley shares a 4.34% dividend yield at the current share price.
Analyst Estimates
According to Bloomberg, analyst estimates for FY19 were NPAT of $22.7 million and a dividend of 2.6 cps. Ridley beat both of these targets with NPAT of $23.5 million and a final dividend of 2.75 cps.
FY20 Outlook
Ridley reported that Beef and Sheep volumes are expected to be positive in FY20 against historical sales volumes, although not as strong as FY19. Poultry volume is expected to increase, although increasing pressure on margins will likely soften the result.
As was announced earlier this month, Ridley has a new CEO as of today, Quinton Hildebrand. The company believes Mr Hildebrand is “the ideal person to refocus Ridley on its domestic growth plans, leverage the investment in its state of the art facilities, and accelerate the commercialisation of its Novacq franchise internationally”.
Is Ridley A Buy?
Ridley shares are down more than 28% over the last six months and, based on the latest EPS figure, are trading on a price-earnings (PE) multiple of 12.89 times. I don’t know enough about the business to say it’s a buy, but I would recommend reading the outlook section of the report if you’re interested in buying shares. The section is very detailed and provides a much more in-depth view of what to expect in FY20 than can be conveyed here.
For now, I’ll stick to the companies in the free report below.
[ls_content_block id=”14945″ para=”paragraphs”]
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
