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Inghams Group (ASX: ING) has reported a sharp fall in FY26 profit as higher labour, feed, cooking oil and other operating costs continued to squeeze the poultry processor, while warning that chicken prices may need to rise to offset a fresh wave of inflation.
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Revenue increased 2.4% to $3.23 billion, but underlying EBITDA fell 21.2% to $186.4 million. Net profit after tax dropped 61.5% to $34.6 million for the year to June 30. The weaker bottom line was reflected in Inghams’ final dividend, which was reduced to 6.1 cents per share from 8 cents a year earlier.
There were some more encouraging signs beneath the headline result. Core poultry volumes increased 1.9%, while the company generated $82.3 million in cost savings, reaching the upper end of its target. Net debt also fell by $27.1 million to $403.3 million.
Inghams said its second half performance was materially stronger than the first, with improvements in production, inventory and supply chain conditions helping the business recover from earlier inefficiencies.
The company is nevertheless entering FY27 with a significant cost challenge. Inghams is facing about $130 million in inflationary costs and expects to recover some of that pressure through higher volumes and pricing.
Chief executive Ed Alexander said the company has prepared for the possibility of avian influenza, including examining how overseas poultry operators have managed outbreaks and developing contingency plans across its Australian network.
Inghams processes around 40% of Australia’s chicken and has facilities across six states, which the company says gives it flexibility to continue supplying customers if an individual facility is disrupted.
The immediate trading environment remains difficult. Alexander said July and much of August had been soft, with excess chicken supply in the wholesale market contributing to weaker conditions. He said there was no food safety issue associated with bird flu and no impact from it through the company’s sales channels.
For investors, the FY26 result leaves Inghams with a recovery story rather than a clean earnings growth story. Core volumes are moving higher and the company has made progress on costs and debt, but margins remain exposed to inflation across feed, labour, freight and other inputs.
The company also faces the challenge of passing those costs through to customers without damaging demand. Its ability to lift prices while maintaining volume growth will therefore be an important factor in determining whether the earnings recovery can gain traction.
Inghams expects FY27 core poultry volumes to grow between 2.5% and 4%, while underlying EBIT guidance is $155 million to $180 million.
The stock has already endured a significant decline, with shares down more than 40% over the past year and falling to $2.05 in early Friday trading.
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