The Inghams Group Ltd (ASX: ING) share price is up around 4% after revealing egg-citing growth in its FY21 half-year result.
Inghams is the biggest poultry business in Australia.
What did Inghams report in the FY21 half-year result?
The chicken business said that its core poultry volume rose by 4% to 224.6kt. There was stronger demand across most channels and the return of overall trading volumes to pre COVID-19 levels.
Revenue increased by 4.6% despite external feed revenue declining, with total poultry revenue growth of 6.1% ahead of volume growth.
Underlying EBITDA (EBITDA explained) rose by 4.3% to $218.6 million and underlying net profit after tax (NPAT) grew by 28.4% to $37.5 million.
Statutory net profit grew even faster, rising 34.7% to $35.3 million. Operating cashflow grew by 12%.
Inghams said that good progress had been achieved in reducing frozen poultry inventory which rose in FY20 due to COVID-19, down $42.3 million during the half year and now close to normal levels.
On feed costs, the company noted that late 2020 delivered a bumper wheat harvest in excess of 30 million tonnes, with an easing in observed spot wheat prices during the first half. Prices have not reached anticipated lows due to strong international demand.
Debt and investing in growth
Inghams disclosed that its net debt had increased by $12.8 million to $327.5 million during the half year, mostly due to continued construction of the new HatchTech hatcheries in Victoria and Western Australia and seasonal working capital (Christmas).
However, its underlying leverage decreased by 5.5% to 1.7 times underlying EBITDA before AASB 16.
Inghams dividend
The Inghams board declared an interim dividend of 7.5 cents, representing an increase of 2.7%,
Outlook and summary thoughts
Inghams continues to focus on the long term with its 5-year strategy to deliver consistent returns for shareholders. The net impact of lower feed prices is expected to be modest in the second half.
The poultry business is making the right moves to generate growth in the short time and the longer term. Investing in new facilities is usually a good move.
I’m not sure how much growth there is available to Inghams, so I’m happy to leave the investing in the company to other investors.
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