Ingham’s delivers strong half year results due to resilient demand and operational momentum

•  Group core poultry volume growth of 4.0% on the prior corresponding period (pcp) and 5.6% on the second half of FY20, reflecting strengthened demand across most channels and the return of overall trading volumes to pre COVID-19 levels
•  Solid total revenue growth of 4.6% despite declining external feed revenue, with total poultry revenue growth of 6.1%, ahead of volume growth
• Good progress achieved in the reduction of frozen poultry inventory arising in FY20 due to COVID-19, down $42.3million during the half year and now close to normal levels
•  Statutory and Underlying EBITDA growth of 5.0% and 4.3% respectively driven by volume growth and improvements in operational efficiencies, Underlying EBITDA pre AASB 16 up $9.0 million or 9.8%
•  Statutory NPAT of $35.3 million up 34.7% and Underlying NPAT of $37.5 million up 28.4%, with Underlying NPAT pre AASB 16 up 10.7%
•  Leverage1 of 1.7x down from 1.8x at June 2020 with Net Debt of $327.5 million at December 2020
•  Interim dividend of 7.5 cps (fully franked), up 0.2 cps on pcp, reflecting a payout ratio of 74.3% of Underlying NPAT post AASB 16, in line with the revised dividend policy

Presentation

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02343336-2A1281426?access_token=83ff96335c2d45a094df02a206a39ff4

Good Trading Update.

• Poultry demand has strengthened,with trading volumes in the first quarter of FY2021up 6.3per cent on the first quarter of FY2020,and up 7.5per centon the last quarterof FY2020.
• Solid progress in the reduction of poultry inventory levels resulting from COVID-19 impacts in FY2020,with initiatives continuing to deliver further reductions in inventory levels by the end of FY2021, supported by Christmas demand.
• Anticipated feed cost reductions in the second half of FY2021 expected to fully realise the benefits in cost of sales by the last quarter of the 2021 financial year.
• Dividend policy reviewed following the adoption of the new leases standard AASB 16 and revised to a 60 to 80 per cent payout ratio of Underlying Net Profit After Tax (NPAT), inclusive of the impact of AASB 16.
• The FY2021 interim dividend, determined under the revised policy, is expected to be paid in April 2021

Up 16%. Think it's due to mainly short covering from such a good update.

FYI: Inghams is one of the top shorted stocks on the ASX. Only reasons I can think people short it is due to climate change, drought risks, water shortage, increasing feed costs,  etc...

Yet I still hold, but mainly for the dividend stream.