The Inghams Group Ltd (ASX: ING) share price is rising after the poultry business delivered its FY21 result.
Ingham’s FY21 report
The chicken business revealed that group core poultry sales volume growth was 4.2% year on year. Ingham’s said this showed the resilience of poultry demand.
It produced total sales revenue growth of 4.4%. Underlying EBITDA (EBITDA explained) grew 9.6% to $448.7 million and underlying net profit after tax jumped 57.4% to $86.7 million.
Statutory EBITDA rose 14.5% to $443.9 million and statutory net profit after tax went up 107.7% to $83.3 million. Operating cashflow before lease payments increased 15.5% to $450.4 million. It delivered solid growth in the HY21 result as well.
Ingham’s said its high safety standards enabled the company to keep operating throughout COVID-19 with minimal operational disruption and perform its role as an essential service provider whilst protecting employees and contractors.
The business said its program of continuous improvement is delivering strong outcomes, driving costs lower, enhancing yield and reducing waste. It has delivered greater asset efficiency and return with modest capital spending.
Poultry inventory declined by $30 million as the company reduced the excess frozen processed poultry that had built up as a result of COVID-19 impacts.
Dividend
Ingham’s board decided on an annual dividend of 16.5 cents per share, which meant that the dividend was increased by 17.9%.
Outlook for Ingham’s and the share price
The poultry business advised that, together with Woolworths Group Ltd (ASX: WOW), it had agreed in principle to an ongoing supply agreement for poultry products on broadly similar terms.
Ingham’s expects to see the consumer recovery restart when vaccination rates increase and the current lockdowns are lifted, despite the near-term uncertainty created by these measures. In line with this, volumes are expected to show continued growth with new business across various channels.
Feed costs have stabilised during the second half, however volatility in international commodity markets has led to domestic pricing “holding firmer”. Ingham’s continues to hold between 3 to 9 months forward purchase cover on key feed ingredients.
It’s expecting that its ‘optimise the core’ program will continue to deliver meaningful benefits more than inflationary cost increases through operational efficiencies implemented across the business.
Ingham’s seems like one of those pretty dependable businesses, though it’s unlikely to see big revenue growth either. It might be a reasonable option as one of the ASX dividend shares for income. The current fully franked yield is 4%.
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