Inghams Group Limited (ASX: ING, Ingham’s), Australia and New Zealand’s largest integrated poultry producer today announced its financial results for the full year ending 29 June 2019 (FY2019).

Here are some of the highlights of the report:

• Continued growth in core poultry volumes
• Contractual arrangements and market position delivered intended outcomes to offset higher input costs
• Solid returns despite growing cost pressures and New Zealand headwinds
• Strong operating cashflow generation, post implementation of payables facility in NZ in 1H FY2019
• Further Processing optimisation project has not delivered to plan, unexpected demand could not be served by the rationalised network, which resulted in increased costs
• Q4 performance softened as a result of Further Processing costs and early signs of margin pressure
• Leadership team now in place blending deep domestic and international operational poultry and food industry experience

Inghams Group Limited Managing Director Jim Leighton said, “The results are solid despite growing costs pressures and New Zealand headwinds, as we continue to see strong demand for Ingham’s quality products across all channels”.

Poultry volumes (excluding ingredients) grew by 4.3% across the Group while underlying Gross Profit increased 3.0% to $480.2m supported by continued progress on sustainable profit improvement initiatives covering automation, labour productivity, procurement, and other initiatives.

Underlying EBITDA increased 2.9% to $208.6m for the full year, while Statutory EBITDA of $242.2m increased 14.2% (including the net positive effect of profit on sale, restructuring charges and discontinued operations), and NPAT increased 10.1% to $126.2m.

The rationalisation of the Further Processing network in Australia has not delivered to plan. Stronger customer demand has placed unexpected pressure on operations which has led to loss of productivity and higher costs.

The performance of the New Zealand business was impacted by oversupply in the market which resulted in flat core poultry volumes and an inability to pass on input cost increases.

Volumes in the Australian Third Party Feed business have declined as a result of cycling the loss of a NSW poultry customer (the exit of Red Lea from the industry) and the sale of Mitavite. New Zealand Third Party Feed volumes declined off the back of the Dairy Feed segment which experienced excellent pasture conditions.

Cash flow for the full year was very strong benefiting from implementation of our payables facility in NZ in 1H FY2019. Net Cash from Operating Activities was 112.7%.