Inghams (ASX:ING) share price on watch after Q1 business update

The Inghams Group Ltd (ASX: ING) share price will be on watch today following the company's release of a business update.

| More on:
woman looking up as if watching asx share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Inghams Group Ltd (ASX: ING) share price will be on watch today following the company's release of a business update.

Let's take a look and see how the poultry producer tracked for the start of the new financial year.

Business update

For the quarter ending 30 September, Inghams reported a strong return in poultry sales volumes, nearing pre COVID-19 levels.

Core poultry volumes sold in the first quarter of FY21 increased by 6.2% to 110.9 kilotons over the prior corresponding period. The surge in momentum also reflected a 7.5% uplift on the prior three months. The growth was driven in both Australia and New Zealand, despite COVID-19 restrictions in Victoria which saw the Inghams Thomastown plant shutdown.

During the quarter, Inghams continued to reduce poultry production levels due to the pandemic. The company is initiating further cuts in inventory levels by the end of FY21. This will be supported by the additional demand over the Christmas holiday period. So far, total poultry inventory has reduced by $16 million in the first 17 weeks of FY21.

Inghams noticed a slight increase in feed costs, however it said that crop harvest for late 2020 is appearing favourable. Moreover, feed prices are expected to be significantly lower in the second half of FY21, resulting in cost efficiency by Q4.

COVID-19 response

Stage 4 lockdowns in Victoria throughout August and September, and level 2 restrictions in New Zealand impacted Inghams' facilities. In response, the company managed to navigate around the constraints imposed through operating on a reduced workforce. Customer demand was met while maintaining full operations across all its plants.

Commenting on the impact, Inghams CEO, Mr Jim Leighton, said:

While navigating continued complexity associated with the COVID-19 pandemic in the first quarter of the financial year, we have maintained an unwavering commitment to the safety and employment of our people, while fulfilling our role as an essential service provider to the people of Australia and New Zealand.

The speed and scale of our response, particularly in the second-waves impacting Victoria and Auckland, was made possible by the enormous efforts of our people who worked together to keep the business running to ensure customer demand was met.

Dividend policy review

Management advised that it has reviewed the current dividend policy following the adoption of the new leases on its balance sheet.

The revised dividend policy is expected to have a pay-out ratio of between 60% and 80% of underlying net profit after tax. The increase in the top end of the dividend range is said to provide the board flexibility to determine dividends going forward.

From FY21, Inghams will begin to report its underlying results inclusive of the impact of its leases. It is anticipated that the company will pay an FY21 interim dividend to shareholders in April 2021.

Inghams Chair, Mr Peter Bush, spoke about the new change. He said:

We were pleased to provide shareholders with a fully franked dividend of 14 cents per share in relation to the 2020 financial year, reflecting a payout ratio of 66 per cent of Underlying NPAT pre AASB 16, within our prior target payout range of 60 to 70 per cent. This was particularly important in light of the challenges that many people have faced throughout the COVID-19 pandemic.

About the Inghams share price

The Inghams share price has had a volatile year. Whilst quickly recovering from the March crash, the company's shares have been on a wild ride since then. The Inghams share price came close to its pre-pandemic highs in July and August this year before commencing another downward trend. Having closed yesterday's session at $2.85, the Inghams share price is currently 16.67% lower in year-to-date trading.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A man looking at his laptop and thinking.
Share Market News

5 things to watch on the ASX 200 on Monday

Here's what to expect on the benchmark index today.

Read more »

An ASX 200 market analyst holds his hand to his chin and looks closely at his computer screens watching share price movements
Opinions

Forget term deposits! I'd buy these two ASX 200 stocks instead

I think ASX stocks could make a much better investment than term deposits.

Read more »

A cute little kid in a suit pulls a shocked face as he talks on his smartphone.
Share Market News

Telstra share price hits 8-year high amid a lacklustre trading week

The ASX 200 communications services sector was the best performer last week, rising 2.96%.

Read more »

share buyers, investors, happy investors
ETFs

How I would build a $100,000 portfolio with ASX ETFs today

You don't need more than three ETFs to build a diversified portfolio...

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Broker Notes

These ASX 200 shares could rise 20% to 100%

Analysts are expecting these shares to deliver big returns over the next 12 months.

Read more »

Three people in a corporate office pour over a tablet, ready to invest.
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares finished the trading week on a high this Friday.

Read more »

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »