Shares in Inghams Group Ltd (ASX: ING) have tumbled 13% on Friday (at the time of writing) after the poultry producer reported sharply lower interim earnings and downgraded its full-year guidance.
While management flagged a stronger second half, investors appeared focused on the scale of the first-half earnings decline and elevated leverage.
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What did Inghams report?
Inghams delivered revenue of $1.61 billion for the 26 weeks to 27 December 2025, broadly flat year on year.
However, profitability deteriorated significantly. EBITDA fell 33.8% to $139.2 million, while net profit after tax (NPAT) slumped 64.9% to $18.1 million.
On an underlying pre-AASB 16 basis, EBITDA was $80.6 million, down 35% on the prior corresponding period. Underlying NPAT pre AASB 16 fell 60.4% to $21.3 million.
Core poultry volumes declined 0.7% year on year, although net selling prices increased 1.4%, partly offsetting the volume weakness.
The board declared a fully-franked interim dividend of 4 cents per share, down from 11 cents in the prior period.
What else do investors need to know?
The earnings decline was driven primarily by higher operating costs in Australia.
Key cost headwinds included excess inventory management ($19 million), incremental supply chain and logistics costs ($6.7 million), lower farming performance ($3.8 million), and transition inefficiencies at Ingleburn ($1.8 million).
Total costs rose 5% versus the prior period, reflecting both these operational pressures and broader inflation across labour, ingredients, utilities, and packaging.
Encouragingly, inventory levels declined by $24.3 million during the half, supporting a return to normalised production settings into the third quarter.
Cash conversion improved to 113.1%, driven by working capital improvements, but net debt increased to $466.1 million. Leverage rose to 2.4x underlying EBITDA pre AASB 16, above the company's target range of 1 to 2 times.
What did management say?
CEO Ed Alexander described the first-half result as "disappointing," citing higher operational costs and inefficiencies associated with supply chain changes and customer onboarding.
He said inventory levels had returned to desired levels and that measures were in place to restore unit cost performance through the second half, including supply chain stabilisation and improved planning.
What's next for Inghams?
Inghams reduced its FY26 underlying EBITDA pre AASB 16 guidance to $180 to $200 million, down from $215 to $230 million previously.
Management expects earnings to be weighted to the second half, with improved production settings, stabilised supply chains, and stronger wholesale pricing supporting a rebound into FY27.
Share price snapshot
After today's result, Ingham shares are now down 16% so far in 2026 and down 35% over the last 12 months.
