- 01FY27 earnings ceiling cut $10m.
- 02Wholesale prices fell 8.3%; costs rose.
- 03Volumes grew 5.3%; Woolworths supply terms agreed in principle beyond 2030.
Inghams Group (ASX: ING) has cut the upper end of its 2027 financial year earnings guidance by $10 million as higher operating costs and weaker Australian wholesale chicken prices offset growing poultry volumes.
The producer recorded 5.3% growth in core poultry volumes during the first 18 weeks to 31 October, led by retail demand in Australia and New Zealand.
Australian wholesale prices fell 8.3% against the prior corresponding period, with a slower-than-expected recovery in the channel continuing to weigh on earnings.
Inghams has meanwhile reached an in-principle agreement on key commercial terms for a new supply arrangement with Woolworths Group (ASX: WOW) extending beyond 2030.
Profit Expectations Narrow
Underlying EBIT after Australian Accounting Standards Board (AASB) 16 lease accounting are now expected at $155m to $170m, compared with the previous $155m to $180m range.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA), before AASB 16, are forecast at $190m to $210m rather than $190m to $220m.
The revised outlook assumes core poultry volume growth of 2.5% to 4% for the full year and operating cost growth excluding feed of 4% to 5%.
Inghams expects an additional $30m in transport and packaging costs associated with the Middle East conflict and $40m to $50m in higher feed costs.
It also plans $80m in capital expenditure and expects FY27 earnings to be significantly weighted towards the second half.
Retail Growth Meets Cost Pressure
Australian poultry volumes rose 4.8% in the opening 18 weeks, while New Zealand delivered 8% growth as retail sales outweighed softer demand from out-of-home customers.
Australian core poultry selling prices increased 1.9%, reflecting changes in sales channels and product mix rather than an improvement across every market.
New Zealand prices declined 0.8% in local currency and 9.6% in Australian dollar terms after foreign exchange movements.
The group faces inflation in feed, labour, energy, fuel, freight, packaging, and ingredients, with price increases not always arriving when costs are incurred.
Commissioning automation upgrades at Osborne Park, shifting to fixed-weight retail products, introducing additional retail volumes, and temporary disruption at a Queensland processing facility have added operational costs.
Supply Agreement and Recovery Plans
The proposed Woolworths agreement would extend a longstanding supply relationship beyond 2030, although the commercial terms remain confidential and the arrangement is not yet finalised.
Inghams considers the agreed volumes and principal terms a foundation for longer-term planning and supply certainty for both businesses.
Operational initiatives are intended to improve efficiency progressively through the remainder of FY27, while management anticipates a gradual recovery in wholesale pricing.
We continue to expect core volumes and net selling prices to be higher than last year, with FY27 earnings performance expected to be significantly weighted to the second half,” managing director Ed Alexander said.
“Our focus remains on converting volume growth into stronger and more sustainable earnings through operational and commercial excellence.”
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