Inghams Holds Steady in FY25 Amid Market Shifts, Eyes Cost Cuts for FY26

FY25 Performance Amid Market Challenges

Inghams Group Limited has delivered a resilient financial performance in FY25, reporting an underlying EBITDA of $236.4 million, effectively flat compared to the prior comparable period. This stability comes despite a backdrop of softer market conditions in Australia, particularly in the fourth quarter, and significant customer contract changes including the renewal of its key Woolworths supply agreement.

The company’s as-reported net profit after tax (NPAT) declined by 10.2% to $89.8 million, primarily reflecting a reduction in lease-related costs following changes in contract grower arrangements and the acquisition of the Bolivar processing facility. Core poultry volumes dipped slightly by 1.4%, with Australian volumes falling 2.5% but offset by a 5.2% increase in New Zealand, where strategic brand and business investments have paid dividends.

Operational Highlights and Cost Management

Inghams successfully navigated the renewal of its Woolworths contract, a critical component of its Australian business, while also expanding its customer base. The company’s focus on cost discipline was evident, with total costs pre-lease accounting down 1.7%, driven by a $57 million reduction in feed costs due to improved input prices. Other operating costs rose modestly, influenced by the integration of Bostock Brothers Limited (BBL) acquired in mid-2024 and inflationary pressures, but were largely offset by efficiency initiatives including a notable 14.6% reduction in selling, general and administrative expenses.

Cash conversion remained robust at nearly 97%, underscoring strong working capital management despite the earnings pressures in the latter part of the year. The balance sheet was strengthened through refinancing that increased facility size by $200 million and extended maturities, supporting ongoing investment in automation and operational improvements.

Outlook and Strategic Focus for FY26

Looking ahead, Inghams has set FY26 underlying EBITDA guidance between $215 million and $230 million, anticipating earnings to be weighted towards the second half. This outlook reflects the lingering impact of weaker fourth-quarter trading in FY25 and the upfront costs of a substantial cost reduction program targeting $60 to $80 million in annualized savings. The company expects modest volume growth overall, with Australian non-Woolworths retail and quick service restaurant channels expanding, while wholesale volumes are targeted for reduction. New Zealand operations are forecast to continue their strong performance.

Net selling prices are expected to soften slightly amid competitive pressures and subdued wholesale conditions, while feed costs should provide a modest tailwind. Capital expenditure is planned between $80 million and $100 million, focusing on sustaining and growth initiatives. Management’s decisive actions to right-size inventory, adjust production, and streamline costs aim to position Inghams for improved profitability beyond FY26.

CEO Ed Alexander emphasized confidence in the company’s long-term value proposition, highlighting the strategic agenda centered on customer service excellence, cost optimisation, and margin enhancement. The disciplined execution seen in New Zealand is now being extended to Australia, signaling a cohesive approach to operational improvement across the group.