Can Ridley Overcome Ingredient Recovery Headwinds Amid Expansion?
Ridley Corporation reports solid FY25 earnings growth and outlines a diversified growth strategy for FY26, anchored by its recent Incitec Pivot Fertilisers acquisition.
- FY25 EBITDA up 8.6% to $97.8 million
- Acquisition of Incitec Pivot Fertilisers completed and integration underway
- Bulk Stockfeeds and Packaged Feeds segments showing steady growth
- FY26 outlook expects continued earnings growth despite short-term margin pressures
- Dividend payout targeted at 50-70% with strong balance sheet maintained
Strong FY25 Performance Sets Stage
Ridley Corporation Limited (ASX, RIC) closed FY25 with encouraging financial results, reporting an 8.6% increase in EBITDA to $97.8 million. This growth was driven by gains across its Bulk Stockfeeds and Packaged Feeds & Ingredients segments, reflecting both market share expansion and operational efficiencies. The company declared a fully franked dividend of 9.75 cents per share, underscoring its commitment to delivering shareholder returns.
The year also saw strategic moves including the sale of the Wasleys Feedmill and acquisition of the Carrick Feedmill, alongside the commencement of a new rendering facility in New Zealand. These initiatives have positioned Ridley to capitalize on evolving agricultural market demands.
Diversification Through Fertiliser Acquisition
A major highlight of the year was Ridley’s acquisition of Incitec Pivot Fertilisers, completed just seven weeks prior to the AGM. This move marks Ridley’s entry into the fertiliser distribution sector, complementing its existing animal feed businesses. The fertiliser segment brings a strong brand, strategic port and distribution assets, and technical expertise, offering new avenues for growth and operational synergies.
Integration efforts are well underway, with a dedicated Project Management Office driving the transition from manufacturing to a distribution-focused model and migrating systems onto Ridley’s platform. Early trading results align with expectations, despite the seasonal lull, and management is focused on streamlining operations and enhancing customer service.
Outlook and Growth Strategy
Looking ahead to FY26, Ridley anticipates continued earnings growth driven by modest expansion in its core Bulk Stockfeeds and Packaged Feeds & Ingredients businesses, alongside the fertiliser segment’s seasonal earnings contribution. While the Ingredient Recovery business faces short-term margin pressures due to low protein meal prices and supply constraints, the overall portfolio’s diversification is expected to provide resilience against commodity cycles and weather variability.
Ridley plans to maintain its disciplined capital allocation framework, targeting a dividend payout ratio between 50% and 70%, and managing leverage within a Net Debt to EBITDA range of 1 to 2 times. The company has delayed its FY26-28 Growth Plan presentation to allow for a thorough review of the fertiliser business, with an Investor Day and site visit planned post-1H results.
Leadership and Shareholder Support
CEO Quinton Hildebrand acknowledged the contributions of the board, leadership team, and employees in navigating a busy year marked by significant change and growth. The company also secured shareholder approval for several resolutions, including performance rights for the CEO and ratification of prior share issues, reflecting strong investor confidence in Ridley’s strategic direction.
As Ridley integrates its new fertiliser business and continues to expand its feed operations, it aims to leverage its technical expertise and operational scale to support Australian agriculture’s growth and competitiveness on the global stage.
Bottom Line?
Ridley’s strategic diversification and solid FY25 results set a promising foundation, but integration execution and margin recovery will be key to sustaining momentum.
Questions in the middle?
- How will Ridley’s fertiliser integration impact margins and operational costs in FY26?
- What are the specific growth targets for each of Ridley’s three business pillars over the next three years?
- How might ongoing low protein meal prices affect the Packaged Feeds & Ingredients segment’s profitability?
