Inghams (ASX:ING) share price slumps 5% amid continued COVID impacts

The Inghams Group Ltd (ASX: ING) share price is sinking in early trade today, down 4.96%.

Inghams shares closed yesterday at $3.53 and are currently trading for $3.36.

Below we look at the highlights from Australia’s biggest integrated poultry producer’s financial results for the half-year ending 31 December (1H FY22).

Inghams share price slides on results

• Statutory earnings before interest, taxes, depreciation and amortisation (EBITDA) of $220.4 million, up 2.2% from 1H FY21; underlying EBITDA up 1.7%
• Statutory net profit after tax (NPAT) increased 8.8% year-on-year to $38.4 million; underlying NPAT was up 5.9%
• Net debt as at December 2021 of $264.6 million, with leverage of 1.3 times down from 1.7 times in December 2020
• Interim dividend of 6.5 cents per share (cps), fully franked, down from 7.5 cps in the prior corresponding period

What else happened during the half-year?

Inghams reported its group core poultry sales volume was up 5.6% from 1H FY21, powered by 6.5% growth in Australia. Its New Zealand core poultry sales volumes were flat, with the reintroduction of strict pandemic lockdowns impacting the market.

While operational efficiency programs continued, the company said COVID-19 had led to cost spikes in transport, heightened health and safety procedures, and increased overtime for its workforce, among others.

Total capital expenditure during the half-year came in at $24.0 million. Capex was down from the prior corresponding half year with some projects disrupted due to COVID and Inghams having completed its hatchery projects.

What did management say?

Commenting on the results pulling down the Inghams share price today, CEO Andrew Reeves said:

The first half of FY22 has been defined by the challenging operating environment that the business has had to navigate, which has been characterised by extended lockdowns and significant operational disruptions caused by ongoing pandemic conditions, with the most recent Omicron-related disruption to be reflected in 2H outcomes.

However, we remain optimistic about the future, especially as the impacts of Omicron recede. The first-half results are a testament to our ability to respond to external challenges and our ability to recover and adapt quickly.

What’s next?

The virus continues to cloud the short-term market outlook.

The Inghams share price could be under some pressure after management said it’s not possible to forecast how long the new variant’s impact will last. However, it said its “business is capable of recovering relatively quickly”.

The company also forecasts higher feed costs in the second half of the year. It’s holding 3-9 months of forward purchase cover on key feed ingredients.

Inghams share price snapshot

Over the past 12 months, the Inghams share price is down almost 7%. That compares to a gain of 5% posted by the S&P/ASX 200 Index (ASX: XJO).

It has also lost 7.4% year to date, compared to the benchmark’s 4.6% fall.

The post Inghams (ASX:ING) share price slumps 5% amid continued COVID impacts appeared first on The Motley Fool Australia.

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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 Bruce Jackson.

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