Inghams lowers FY27 earnings ceiling as Wholesale weakness persists

FY27 earnings ceiling lowered as costs bite

Inghams Group Limited (ASX:ING) has cut the upper end of its FY27 earnings guidance by $10 million after higher operating costs and a slower-than-expected recovery in Australian Wholesale pricing outweighed solid poultry volume growth. Underlying EBIT is now expected at $155 million to $170 million, compared with the previous ceiling of $180 million, while Underlying EBITDA before AASB 16 is forecast at $190 million to $210 million, down from a $220 million upper limit.

The downgrade extends a difficult earnings trajectory for the poultry producer. Inghams’ FY26 results showed revenue growth but a 61.5% fall in net profit, while underlying EBITDA before AASB 16 declined 21.2%, as reported in the FY26 profit collapse. The current update does not provide earnings for the 18-week period, but it makes clear that volume recovery has not yet translated cleanly into profit growth.

Retail volumes rise while Wholesale pricing weakens

Core poultry volumes increased 5.3% against the prior corresponding period, with Australia up 4.8% and New Zealand up 8.0%. Retail was the main growth engine, while demand through out-of-home channels was softer as cost-of-living pressures affected customers.

That split is central to the guidance reduction. Australian core poultry pricing rose 1.9% overall, partly reflecting channel and product mix, but Australian Wholesale pricing fell 8.3%. Inghams said changes in customer supply arrangements had contributed to excess market supply, while the anticipated recovery in the channel has taken longer than expected. The company has reduced its exposure, but weaker pricing continues to weigh on FY27 earnings.

Woolworths agreement adds certainty without disclosing economics

Inghams has also reached an agreement in-principle on key commercial terms for a new long-term supply arrangement with Woolworths, extending the relationship beyond 2030. The company described Woolworths as a longstanding customer and said the proposed deal offers greater certainty for both parties, but commercial terms were not disclosed.

The arrangement is therefore strategically notable but financially difficult to assess from the announcement alone. Inghams said it was pleased with the agreed volumes and key terms, while the filing stops short of describing the agreement as a final executed contract.

Cost inflation and operational disruption shift the burden to the second half

Feed, labour, energy, fuel and freight, packaging and ingredients have all risen in cost. Inghams is assuming $40 million to $50 million of higher feed input costs for FY27, alongside $30 million of additional transport and packaging costs associated with the Middle East conflict. It expects operating cost growth excluding feed of 4% to 5%, with recovery dependent on pricing, procurement and continuous-improvement initiatives.

The business has also absorbed costs from commissioning automation upgrades at Osborne Park, moving to fixed-weight retail products, adding substantial retail volumes and temporary disruption at its Queensland primary processing facility. Inghams expects efficiency to improve progressively, and says FY27 earnings will be significantly weighted to the second half. That places particular importance on the assumed recovery in Wholesale pricing, the conversion of new volumes into margin and the delivery of $80 million in planned capital expenditure.