Inghams Group shares (ASX:ING) have plummeted to a multi-year low following the release of its FY2025 earnings report and concerns surrounding a revised supply agreement with Woolworths. The poultry producer is facing headwinds as markets digest the implications for future revenue and profitability.
The company’s shares closed at A$2.65, marking a 17.19% decline year to date, and a new low. This sharp drop reflects significant market disappointment with the company’s recent financial performance and strategic outlook.
Inghams’ FY2025 results, released on August 22nd, revealed a 1.5% year-on-year decrease in revenue to A$3.15 billion, primarily driven by a 1.4% reduction in core poultry volume. EBITDA fell by 15.3% to A$392.2 million, while net profit after tax (NPAT) decreased by 10.2% to A$89.8 million. The company declared a final fully franked dividend of 8.0 cents per share, bringing the full-year payout to 19 cents per share, a 5% reduction from the previous year.
A key factor influencing market sentiment is the renewal of Inghams’ supply agreement with Woolworths Group Ltd. The new agreement includes a phased reduction in annual volumes, aligning with Woolworths’ strategy to diversify its supplier base. This development has raised concerns about potential revenue impacts and market share loss for Inghams.
Top Australian Brokers
- Pepperstone - Top Australian broker - Read our review
- eToro - Invest in ASX and international shares - Read our review
Following the earnings announcement, analysts have revised their outlook on Inghams. According to Fintel.io, the average one-year price target was decreased by 14.99% to A$3.09. Despite the lower price target, it still represents an 11.82% increase from the latest reported closing price of A$2.76, suggesting some analysts see potential for recovery.
In February, Inghams announced a dividend of A$0.11 per share, yielding approximately 5.9%. The dividend payout ratio stood at 79% of earnings but only 25% of free cash flows, indicating that the dividend was well-covered by cash flow.
Inghams’ share price has exhibited significant volatility over the past year. After a 30% gain between late October and mid-February, the stock experienced a 20% drop following the 1H2024 results and another 20% decline after the full-year results.
Inghams faces the challenge of navigating a changing market landscape. While the company maintains a solid dividend yield and has taken steps to manage costs, the revised Woolworths agreement and overall market volatility present considerable headwinds. The company’s ability to adapt its strategy and maintain profitability will be crucial in determining its future performance.
Don’t Buy Just Yet
You will want to see this before you make any decisions.
Before you decide which shares to add to your portfolio you might want to take a look at this special report we recently published.
Our experts picked out The 5 best ASX shares to buy in 2025.
We’re giving away this valuable research for FREE.
Click below to secure your copy
