Recently listed poultry producer Inghams Group has achieved a better-than-expected annual profit of $59 million, due partly to the supermarket battle over roast chickens.
Inghams forecast a net profit of $52.7 million for the 2016/17 financial year when it listed on the share market in November, and said on Tuesday that better than expected growth in poultry volumes in the second half of the year contributed to annual volume growth of 8.8 per cent.
That was partly driven by price cuts on roast chickens by Woolworths and Coles, plus greater demand from fast-food chains.
Chief executive Mick McMahon said volume growth would continue, but at levels closer to historical averages at around 3.5 per cent and four per cent.
"I'm just making sure that no one thinks that 8.8 per cent is normal," he said.
Mr McMahon also joined the growing number of executives to highlight the impact of rising power costs, though he said Inghams is covered until part-way through the current financial year, so price increases won't bite until the second half.
The company's electricity bill is around $30 million and is expected to rise by around $20 million over the next two financial years, he said.
"That's the challenge facing industries like ourselves; I'm not entirely sure that everyone's aware of the extent of the market failure here," Mr McMahon said.
At least half of the increase is expected to be recovered though the market while the remainder would be offset through energy efficiency initiatives, he said.
Inghams said feed prices have also increased in recent months, but it expects that to be mitigated by passing it on to customers, with chicken prices increasing in recent weeks.
Mr McMahon said the company was benefiting from automation and better labour productivity, and would also focus on high-end premium exports.
Inghams shares dropped 14 cents, or four per cent, to $3.36.
VOLUME SPIKE DELIVERS JUICY PROFIT FOR INGHAMS:
* Full year net profit of $59.1m, up from $25.2m
* Revenue up 5.1pct to $2.43b
* Final dividend of 9.5 cents, fully franked
