Inghams Reports FY26 Revenue of $3.23B, NPAT Falls 61.5%, Dividend Declared

Profit Collapse Overshadows Revenue Growth

Inghams Group Limited (ASX:ING) reported a 2.4% increase in revenue for the full year ended 27 June 2026, reaching $3.23 billion. However, this topline growth belied a severe earnings contraction, with net profit after tax plunging 61.5% to $34.6 million. Underlying EBITDA pre AASB 16 also fell sharply by 21.2% to $186.4 million, reflecting a challenging operating environment marked by inflationary pressures, operational inefficiencies, and a significant tax provision.

The company attributed the profit decline partly to a $12.7 million provision related to an ongoing dispute with the Australian Taxation Office over R&D tax offset claims for 2019 to 2021. Inghams has lodged formal objections and intends to contest the assessment vigorously, leaving uncertainty over the ultimate financial impact.

Volume Gains and Pricing Offset by Rising Costs

Core poultry volumes grew 1.9%, with Australia up 2.0% and New Zealand 1.5%, supported by broad-based channel growth including a 17.2% lift in Australian retail sales excluding Woolworths. Net selling prices rose 1.4%, driven by disciplined pricing strategies across key channels.

Despite these positives, total costs increased 6.2%, driven by inflationary pressures in packaging, ingredients, freight, labour, and repairs and maintenance. The Middle East conflict added approximately $13.2 million in transport and packaging costs. Inghams also incurred operating costs related to transitioning contract growers to variable performance-based agreements, which increased expenses by $29 million but were largely offset by lower lease depreciation and interest charges under AASB 16 accounting.

Feed costs declined by $27.6 million, reflecting lower input prices during FY26, but are expected to rise by $40–50 million in FY27 amid tightening global markets.

Executive Incentives Forfeited Amid Disappointing Results

The Board exercised downward discretion to zero on the FY26 short-term incentive plan (STIP) payouts for the CEO Edward Alexander, Chief Financial and Commercial Officer Gary Mallett, and the Executive Leadership Team. This decision followed a balanced scorecard outcome of just 11% of target, with financial metrics falling well short of expectations. The long-term incentive plan (LTIP) for FY24-FY26 vested at 31.94%, with no vesting on the relative total shareholder return (TSR) component and partial vesting on return on invested capital (ROIC).

Looking ahead, the company plans to revamp its FY27 STIP framework to focus more explicitly on operational efficiency, margin improvement, capital discipline, and individual accountability, moving away from multipliers toward clearer performance metrics.

Balance Sheet Strengthened but Leverage Elevated

Inghams reduced net debt by $27.1 million to $403.3 million, aided by strong cash conversion of 105.5% driven by working capital initiatives including a $32.4 million reduction in Australian processed poultry inventory. However, leverage rose to 2.2 times underlying EBITDA pre AASB 16, exceeding the company’s target range of 1.0 to 2.0 times due to lower earnings.

Capital expenditure totalled $77.4 million, focused on sustaining assets and growth projects such as automation initiatives at Lytton, Murarrie, Bolivar, and expansion of fully cooked capacity at Lisarow. The company also invested $8.5 million in an advanced ingredients facility to convert by-products into higher-value pet food inputs, signalling a strategic push into circular economy opportunities.

Biosecurity and Climate Risks Under Watch

Heightened biosecurity vigilance remains a priority following detections of H5 avian influenza in wild birds across Australia and New Zealand in late FY26. Inghams has implemented voluntary housing of free-range birds and strict access controls, with no detections in commercial flocks to date.

On the sustainability front, Inghams reported a 15.7% reduction in absolute Scope 1 and 2 greenhouse gas emissions since FY19 but acknowledged it is not on track to meet its 2030 target of a 46.2% reduction. The company is developing an emissions reduction plan and plans to integrate climate risk into capital allocation decisions from FY27.

FY27 Outlook Cautious Amid Inflation and Geopolitical Headwinds

For FY27, Inghams expects underlying EBIT (post AASB 16) between $155 million and $180 million, implying modest growth of 1% to 17% over FY26. This outlook assumes core poultry volume growth of 2.5% to 4.0%, operating cost inflation of 4% to 5% excluding feed, and $40–50 million higher feed input costs. Additional transport and packaging costs related to the Middle East conflict are forecast at $30 million. Capital expenditure is expected to remain around $80 million.

The company has introduced a dividend reinvestment plan alongside a fully franked final dividend of 6.1 cents per share, maintaining a payout ratio of 70% of underlying NPAT.

Governance and Board Changes

The Board welcomed Patrick McEntee as a Non-Executive Director in June 2026, bringing extensive food sector and agribusiness experience. The Board and its committees maintained rigorous oversight of risk management, remuneration, and sustainability disclosures, with the Remuneration Report audited and approved by KPMG.

Executive remuneration remains closely aligned with performance and shareholder interests, with a strong emphasis on governance and transparency.