Ridley Corporation’s first full reporting year with the Incitec Pivot Fertilisers distribution business produced a sharp lift in underlying earnings and cash flow, despite a steep fall in statutory profit after a $31.8 million NovaqPro impairment. Management expects earnings growth across all three segments in FY27, but the enlarged group now carries significantly more debt and integration work.
- Underlying EBITDA rose 61.8% to $157.8 million
- Fertiliser segment contributed $72.2 million over nine months
- Statutory NPAT fell 36.4% to $27.6 million
- NovaqPro assets written off after commercialisation stalled
- Fully franked FY26 dividend increased to 10.45 cents per share
Fertiliser acquisition reshapes Ridley’s earnings
Ridley Corporation Limited (ASX:RIC) has emerged from FY26 with a much larger earnings base, but not a cleaner profit story. Underlying EBITDA jumped 61.8% to $157.8 million after the acquisition of the Incitec Pivot Fertilisers distribution business, while operating cash flow climbed to $122.4 million from $68.3 million.
The fertiliser operation contributed $72.2 million of EBITDA during Ridley’s first nine months of ownership, which the company said was at the higher end of expectations. Higher global fertiliser prices helped margins, although those prices also weighed on volumes by affecting farm economics and growers’ application decisions. The contribution was therefore substantial, but the year does not yet represent a full-period test of the enlarged business.
Underlying growth collides with statutory charges
Underlying net profit after tax rose 41.5% to $61.0 million, with earnings per share before significant items increasing to 16.3 cents from 13.8 cents. Statutory NPAT, however, fell to $27.6 million from $43.3 million after $33.5 million of after-tax significant items.
Those charges included $34.6 million of acquisition and integration costs, $4.9 million of restructuring costs, a $7.1 million unwind of the acquired inventory fair-value uplift and the $31.8 million NovaqPro write-off. Ridley said the NovaqPro business remains operational and that strategic alternatives are still being considered, but its remaining assets now carry no value on the balance sheet. The acquisition accounting itself also remains provisional until the measurement period closes on 30 September 2026.
Feed businesses split in opposite directions
Bulk Stockfeeds delivered a quieter but solid improvement, with EBITDA rising to $50.3 million from $47.8 million. Monogastric volumes grew 7% and ruminant volumes 4.1%, supported by customer gains, procurement improvements and capacity investments at the Lara and Terang feedmills.
Packaged Feeds and Ingredients moved the other way. EBITDA fell to $51.6 million from $62.9 million as capacity constraints at the Maroota rendering plant, commissioning delays at Oceania Meat Processors’ Timaru facility and weaker ovine supply weighed on ingredient recovery. Packaged products offered some relief, with dog food volumes up 33% and total packaged product volumes increasing 12.3%.
More debt, higher dividend and a working-capital test
Ridley finished the year with net debt of $295.9 million, compared with net cash of $64.7 million a year earlier, reflecting the fertiliser acquisition and the enlarged working-capital cycle. Headline leverage was 0.85 times, below the company’s target range of 1.0 to 2.0 times, although management cautioned that the June figure benefited from early seasonal fertiliser sales. Net finance costs more than tripled to $32.2 million.
The board nevertheless lifted the final dividend to 5.35 cents per share, fully franked, taking the FY26 total to 10.45 cents. The payout sits within Ridley’s stated 50% to 70% target range of NPAT, while liquidity headroom stood at $444 million against facility limits of $740 million.
FY27 depends on integration and recovery
Ridley expects earnings growth from each reporting segment in FY27. The company points to a full-year fertiliser contribution and integration benefits, further volume and capacity utilisation gains in Bulk Stockfeeds, and an operational recovery in Packaged Feeds and Ingredients. IT systems migration for the fertiliser business remains on track for completion during FY27, with the broader streamlining program continuing into FY28.
That outlook is qualitative rather than a quantified earnings target. The next reporting cycle will show whether fertiliser margins and volumes can hold together once the business carries a full year of ownership, whether the enlarged working-capital base converts into debt reduction, and whether the weaker ingredients operations can recover without another round of exceptional costs.
Bottom Line?
Ridley has bought itself a stronger earnings platform, but FY27 will test whether the fertiliser uplift survives normalised pricing while integration costs, debt and NovaqPro’s unresolved future recede.
Questions in the middle?
- Can the fertiliser business deliver a full-year contribution without a material volume or margin reversal?
- How quickly can operating cash flow reduce the debt added through the acquisition?
- Will Packaged Feeds and Ingredients recover, or remain a drag on the enlarged group?