Shares in Ridley Corporation Ltd (ASX: RIC) have jumped more than 18% after the company reported a large increase in first-half net profit and revenue.
In a statement to the ASX on Thursday, the company said revenue had increased 55.8% to $1.026 billion, while net profit was up 137.4% to $52.7 million.
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Shareholders rewarded
Ridley also boosted its interim dividend, paying 5.1 cents per share for the first half, up from 4.75 cents for the same period the previous year.
Earnings per share for the company jumped from 6.7 cents for the first half of FY25 to 14 cents per share for the most recent half.
Breaking the result down by divisions, Ridley said the bulk stock feeds division contributed EBITDA of $27.1 million, up 24.8% on the previous corresponding period.
The company added:
The increase in segment earnings was driven by improved volumes across the majority of monogastric and ruminant species. Volumes sold in the dairy, beef and sheep sectors improved compared to the previous corresponding period, and poultry volumes were higher on a 'like-for-like' basis after adjusting for the impact of the lost Wasleys volumes following the sale of that plant in June FY25. Procurement margins also improved, as a result of buying strategies across the network. Improved efficiency was experienced across our manufacturing sites, supported by de bottlenecking projects completed in recent years.
The packaged feeds and ingredients division contributed EBITDA of $25.6 million, which was a 28.5% decline.
Ridley said this was driven by lower commodity prices for key ingredient recovery products such as meals, oils, and tallow.
The Incitec Pivot Fertilisers Distribution (IPF) business was acquired by Ridley on September 30, and contributed $10.3 million in earnings from that date.
The company added:
The contribution relates to what is seasonally a low demand quarter. The contribution of $10.3m compares with $8.6m1 (for the adjusted distribution business under previous ownership) in the previous corresponding period, despite lower sales volumes. The business continues to focus on margin management and cost control, which were the key drivers of the improved operating result.
Books looking solid
Ridley said its balance sheet remained strong.
Despite the acquisition of IPF (net assets acquired of $489.5m), the net debt only increased by $321.2m in the six month period, with the business benefitting from an improvement in working capital, adjusted by the increase in dividends, capex, tax and interest, primarily associated with the acquisition. The strong cashflow and debt position has supported the proposed increase in the interim dividend to 5.10 cps, fully franked.
On the outlook, the company said it would provide more details in early March; however, it expected earnings growth to be driven by a full contribution from the IPF business, increased market share and volume-related efficiency in the bulk stock feeds division, and processing improvements in the packaged feeds and ingredients division.
Ridley Corporation shares were 18.3% higher in early trade at $2.91. The company was valued at $922 million at Wednesday's close.
