Inghams reported 1H26 EBITDA of $81 million, close to guidance.  Even though earnings were near guidance, the company has downgraded its FY26e outlook. The reasons cited appear mostly temporary but there are structural challenges around supply chain costs serving its customers. Inghams volume and price outlook are more encouraging and margins should recover. However, with such volatility in earnings over the past 18 months and high gearing, it will take time to rebuild investor trust.

Inghams reported FY25 EBITDA pre AASB-16 of $236 million. While earnings were steady year-on- year on a 52-week basis, the fourth quarter deteriorated given excess poultry supply and lower prices. The oversupply arose because Inghams thought it could replace the lost Woolworths volumes. Oversupply will hurt Inghams’ 1H26e EBITDA but then should correct itself as production is reset. We expect pricing and margins to drop in 1H26e but then rise in 2H26e.

We initiate coverage of Inghams Group, the largest poultry company across Australia/NZ.  The drivers of Inghams earnings growth are continued solid demand growth for poultry, a favourable sales mix and reduced feed costs. The company can also make acquisitions and may expand into pet food supply or meal kits. We see an upside skew in margins with a better sales mix and rational pricing in the poultry market for both Australia and New Zealand.