Inghams inks new Woolies deal but war plucks at profit

Detailed summary

Chicken supplier Inghams has secured a long-term Woolworths deal, but Middle East conflict, fuel and feed costs have forced a $10m cut to its profit forecast.

Australia's largest chicken supplier has inked a new deal with the nation's biggest grocery chain, but its margins remain under pressure from ripple effects of the Iran war.

Inghams reached an in-principle, long-term supply agreement with Woolworths, which would extend the two companies' relationship into the 2030s, Inghams chief executive and managing director Ed Alexander said.

"For Ingham, this obviously represents a significant step forward, supporting our long-term planning, investment, and the continued development of our Australian operations," he told shareholders at the group's annual meeting in Sydney.

"While the commercial terms remain confidential, we are pleased with the agreed volumes and key terms, which provide a strong foundation for our ongoing partnership," he said.

Despite the good news, the poultry producer has trimmed the upper end of its forward operating income guidance range by $10 million, targeting between $155.0 million and $170.0 million.

Higher freight, feed and packaging costs due to Middle East oil supply disruptions continued to pose a challenge to the company's bottom line, chair Helen Nash said.

"Inflationary pressures remain a feature of the Australian business environment and are stubbornly high, exacerbated by the current Middle Eastern conflict, which is being mainly felt through higher fuel and packaging costs," Ms Nash told shareholders.

The group's updated guidance assumed additional transport and packaging costs of $30 million, and $40 million to $50 million of higher feed input costs.

Inghams predicted core poultry volume growth of up to four per cent, a progressive recovery in wholesale pricing into 2027, and capital expenditure of $80 million.

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