Inghams share price dives 7% on slashed dividend

The interim dividend for FY23 has been cut by 44% to 4.5 cents per share following a 55% drop in net profit.

| More on:
A male executive worker wearing glasses and a blue collared shirt looks at his laptop screen with a concerned look on his face and his hand to his forehead as he watches his screen.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Inghams reported a 55% fall in net profit today and has slashed its interim dividend by 44%  
  • Inflation and COVID-19 absenteeism have had a large impact on the poultry business, with revenue up 8.9% but the cost of sales up 10.9% 
  • The company says the 1H FY23 results are down on 1H FY22 but are also a "significant improvement" on 2H FY22

The Inghams Group Ltd (ASX: ING) share price is in the red today after the company released its FY23 half-year results.

The Inghams share price opened at $2.63, down 4.4% on yesterday's close, before falling to an intraday low of $2.55, down 7.3%.

It has since recovered somewhat to $2.71, down 1.45% for the day at the time of writing.

Let's take a look at the company's results.

Inghams share price punished after 44% dividend cut

Inghams said its 1H FY23 results represented "a significant improvement" on 2H FY22, but were below the prior corresponding period (pcp) of 1H FY22.

The interim dividend was cut to 4 cents per share, down from 6.5 cents per share in FY22. This reflects lower earnings but remains within the company's payout policy range.

Here are the key points for the six months to 31 December 2022:

What else happened in 1H FY23?

Inghams said inflation was impacting the company on several fronts, with the cost of many inputs rising, including feed, fuel and transport, packaging, and ingredients. Feed costs increased by $57.9 million pcp.

Inghams said it has increased its prices and will "pass on further price increases as required".

Inghams reported net debt of $294.2 million, up 10.1% on FY22 due to reduced operating earnings and increased working capital expenditure.

Debt leverage is 2.5 times, which is outside the company's comfort zone of 1–2 times. The company extended its $345 million debt facilities for an extra two years to November 2025.

Inghams said it completed the design phase of its business transformation program but will postpone its implementation "for the medium term" to focus on other priorities, including higher return projects.

What did management say?

Ingham's CEO and managing director, Andrew Reeves, said:

Our results for the first half represent a significant improvement for the business over second half of FY22, and we expect this positive momentum to continue as we proceed through the second half of the financial year.

While it is clear the business is successfully transitioning from the various operational challenges experienced over the past 12 months, our farming operations are taking longer to return to normal levels, resulting in lower than required poultry volumes.

We also continue to manage a number of general market headwinds including supply chain disruptions and broad inflationary pressures, that are a feature of the current operating environment.

What's next?

In a statement, the company said it has implemented initiatives to address reduced farming performance, with more chickens expected to become available later in 2H FY23.

The company said that in today's economy, poultry has an advantage over red meat because it's cheaper.

Inghams share price snapshot

The Inghams share price has decreased by 23% over the past 12 months.

Inghams has vastly underperformed its peers, with the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) up 6.1% over the period.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Doctor doing a telemedicine using laptop at a medical clinic
Earnings Results

Polynovo share price surges after 57% revenue gain in FY24

Global sales continue to grow for Polynovo.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Earnings Results

Paladin Energy share price in focus on quarterly production data

The uranium producer had a reasonably constructive quarter.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Earnings Results

ASX 200 stock jumps 10% on strong FY24 results

How did this KFC restaurant operator perform in FY 2024?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Consumer Staples & Discretionary Shares

Guess which ASX 200 stock just slashed its final dividend by 23%

This retailer had a tough time during the 12 months. Here's how it performed.

Read more »

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »