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Inghams Group Ltd (ASX:ING) profits as Australians turn to chicken

Leading chicken producer Inghams Group Ltd (ASX: ING) has posted an underlying net profit after tax of $112.5 million for FY 2018, representing a gain of 10.3% on the company’s results for the prior corresponding period.

Inghams, with operations centred in Australia and New Zealand where the company supplies markets with a range of poultry products and feed for livestock, stated that its core chicken and turkey business had grown by 3.2%.

The increase in sales of the company’s chicken and turkey business helped drive up profits as Inghams’ EBITDA for FY 2018 increased by 7.1% on the previous year’s result to come in at $208.9 million while revenue dropped 2.2% to $2.37 billion.

The group was able to reduce net debt by $154.2 million to $145.4 million and will pay shareholders a final dividend of 11.6 cents per share, bringing the company’s total dividend payable for FY 2018 to 21.1 cents per share.

The Inghams share price has gained about 10% in the past year and is currently trading at around $3.77 after hitting an all-high on 1 June of $3.99 before embarking on a sharp descent.

The chicken producer’s share price copped a battering amid news that managing director Mick McMahan was planning to step down.

Key management shakeups are not the only concerns weighing on investors’ minds.

As a supplier for supermarkets including Woolworths Group Ltd (ASX: WOW) and Coles, owned by Wesfarmers Ltd (ASX: WES), changes in the competitive landscape could impact Inghams’ sales.

It is also possible that the drought could hit the company’s livestock feed business as well as having an impact on the company’s core chicken and turkey business.

But Inghams, which started with a rooster and six hens in a piece of bushland outside Sydney in 1918 before eventually listing on the ASX in 2016, has proved it is a resilient company.

Besides, as Inghams managing director Mick McMahan recently told News Corp (ASX: NWS): when times are tough, Australians turn to chicken.

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