Some high yield, down under growth stocks are likely to outperform amid low rates. One such ASX stock is
Inghams Group Limited (ASX: ING)
Inghams Group Limited on 19 August 2024 announced its FY24 financial results, driven by strong operating performance in New Zealand. An Increase in core Poultry volumes along with the selling price resulted in increased revenues.
New Zealand volume increased by 8.4% on PCP, driven by a return to normal operating capacity compared to FY23 and targeted new business development in the QSR and Wholesale channels.
ING posted 7.2% revenue growth from FY23 to $3262 million and EBITDA of $240.1 million, up by 30.8% from FY23. NPAT reported an increase of 68.0% to $101.5 million, and Underlying NPAT of $109.2 million, an increase of 31.3% on PCP. Operating cashflows were up by 21.9% on FY23 to $ 453.1 million. EPS of 27.3cps, up by 68% on FY23.ING declared a fully franked dividend of 20cps, up by 37.9% on FY23 with a payout ratio of 73.1% compared to 75.9% in FY23. Group ROIC in FY24 reported at 21.3% compared to 19% in FY23. Capex and acquisition totalled to $168.3 million compared to $71.9 million in FY23.
The poultry market continues to show strong demand, driven by evolving consumer preferences for protein-rich diets. Ingham's strategic initiatives are well-aligned with these trends, enhancing its prospects for sustained revenue growth.
As Woolworths' #1 supply partner, the company is set to implement a new multi-year supply agreement that will be phased in over FY25, based on satisfactory commercial terms. This agreement includes a gradual reduction in annual volume, which supports the company's customer diversification strategy and aligns with Woolworths’ initiative to diversify its supplier mix within the fresh poultry category. Additionally, the company has secured significant new business from other customers for FY25 and is actively pursuing further opportunities across its customer base.
Inghams has demonstrated a strong track record of cash generation, achieving a cash conversion rate of 97.7%. This level of efficiency provides the company with the financial flexibility to pursue growth initiatives and invest in strategic projects. Notably, Ingham's is making significant capital investments, including the $76.0 million acquisition of the Bolivar Primary Processing plant and $4.5 million for Bromley Park Hatcheries in New Zealand. These strategic acquisitions are expected to enhance operational capabilities and support future growth.
The increase of approximately $100.5 million in property, plant, and equipment underscores Ingham's commitment to improving its operational infrastructure, which is essential for meeting rising market demand. Additionally, the allocation of $36.6 million to core and high-growth projects reflects the company's proactive approach to expanding its market share and enhancing production efficiency. Investments in automation and advanced processing technologies will position Ingham's to capitalize on evolving industry trends. While net debt increased to $347.9 million, the leverage ratio of 1.5x indicates that Ingham's is effectively managing its debt while continuing to pursue growth opportunities. This balance between leveraging resources and maintaining financial stability positions the company well for sustainable growth.
Source: Company’s Report
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