The Inghams Group Ltd (ASX: ING) share price is being sold off on Friday morning.
At the time of writing, the ASX 200 stock is down 21% to $3.06.
This follows the release of the poultry producer's FY 2024 results.
ASX 200 stock crashes on full-year results
- Revenue up 7.2% to $3,262 million
- Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) up 30.8% to $240.1 million
- Net profit after tax up 68% to $101.5 million
- Total dividends up 37.9% to 20 cents per share
What happened in FY 2024?
During the 12 months ended 30 June, Inghams reported a 7.2% increase in revenue to $3,262 million. This was driven by growth in core poultry volumes and higher core poultry net selling prices.
Inghams' net selling price was up 5.4% following price increases implemented in FY 2023 and FY 2024 in response to the significant cost increases borne by the business due to the current inflationary environment.
Also growing was its underlying EBITDA, which increased 30.8% to $240.1 million. This is the highest the company has achieved since listing in 2016. Net profit after tax grew even quicker and was up 68% on the prior corresponding period to $101.5 million.
This allowed the ASX 200 stock's board to declare a fully franked final dividend of 8 cents per share, which brought its total dividends to 20 cents per share in FY 2024. This is up 37.9% year on year.
Why the selling?
Given how strong this result looks on paper, investors may be rightfully wondering why the Inghams share price is crashing so hard today.
One reason may be that Inghams has agreed in-principle commercial terms for the renewal of its multi-year supply agreement for Australia with supermarket giant Woolworths Group Ltd (ASX: WOW).
This new agreement will see Inghams remain Woolworths' number one poultry supply partner. However, the agreement, which is on satisfactory commercial terms, provides for a "phased reduction in annual volumes."
Management advised that this "aligns with Woolworths' approach of diversifying its supplier mix across its fresh poultry category." The new agreement will be phased in over FY 2025.
Outlook
It remains unclear what this new agreement will mean for volumes in FY 2026 and beyond. But for FY 2025, management is guiding to total core poultry volume declines of 1% to 3%.
This is expected to lead to underlying EBITDA of $236 million to $250 million. This represents flat to ~6% growth.
However, management has warned that "consumer conditions in the near term are expected to remain challenging due to cost-of-living pressures, with inflation expected to remain elevated during FY25."
