Sharechat Logo

Ingham's sees New Zealand's chicken glut persisting

Wednesday 15th February 2017

Text too small?

Ingham's Group expects New Zealand's oversupply of chicken to continue this year, keeping prices cheap and crimping the trans-Tasman poultry producer's local earnings.

The Sydney-based company's Kiwi division accounts for about 15 percent of the ASX-listed firm's revenue, and like its rival, Tegel Group Holdings, had to contend with low domestic prices with chicken supply outstripping demand. Ingham's New Zealand earnings before interest, tax, depreciation and amortisation fell 5.8 percent to A$17.7 million on largely flat revenue of A$185.8 million in the six months ended Dec. 24. Local poultry volumes fell 0.6 percent to 36,300 tonnes and feed volumes sank 11 percent to 69,100 tonnes.

"New Zealand volumes were flat in a challenging market, driven by reduced industry export volumes translating to domestic oversupply," Ingham's said in a statement. "New Zealand trading conditions are likely to continue in the second half."

That echoes Tegel's complaints in December when the NZX-listed firm posted a 4 percent decline in first-half earnings, while also warning that imbalance was likely to continue throughout the latter half of the year. Government data yesterday showed consumer poultry prices were 7.2 percent lower in January than the same month a year earlier.

Ingham's listed on the ASX in November in an A$1.2 billion initial public offering, selling shares at A$3.15 apiece, below an earlier target range of A$3.57 to A$4.14 per share. The shares last traded at A$3.39, while Tegel's were down 3 percent to $1.29 on the NZX.

The IPO's transaction costs amounted to A$28 million. Stripping out that and other one-off costs, Ingham's group earnings rose 14 percent to A$51.3 million on a 4.3 percent gain in revenue to A$1.23 billion, with strong growth in the firm's sales of Australian poultry. The board declared a 'stub' dividend 2.6 Australian cents per share, referring to the truncated period as a public company, and affirmed its intention to pay fully-franked dividends of between 65-and-70 percent of pro forma net profit.

Ingham's still expects annual pro forma net profit of A$98.8 million as projected in its prospectus.



Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.
Bookmark and Share   Printable version
Related News

Why I am backing Tony Falkenstein for the NZX Board - by Brent King
MARKET CLOSE: NZ shares fall; Contact, Trustpower give up gains
NZ dollar steady, markets looking ahead to next week's US data
Restaurant Brands sales to exceed $700 mln in 2018 as KFC market keeps growing, CEO says
NZ construction sector upbeat on infrastructure work, buoyed by govt injection
Vector signs multi-million battery storage deal with Territory Generation in Alice Springs
NZ wool prices fall; crossbred fleece hits lowest level in 7 1/2 years
Restaurant Brands to seek ASX dual-listing
NZ dollar rises after RBNZ maintains stance in latest rates review
While you were sleeping: Health care stocks rise

IRG See IRG research reports