Inghams, the country’s leading poultry producer, is considering a sale after its share price dropped 23% this year and annual profit declined 11.5% to $89.8 million. Facing pressure from increasing input costs and aggressive pricing from supermarket chains, company representatives have reportedly been sounding out potential buyers behind the scenes.
Inghams was listed in 2016 after its acquisition by a private equity firm. It once controlled about 25% of the poultry market but is now facing growing pressure from long-term competitor Baiada. Baiada, a privately owned company with an estimated 18% market share, has been gaining ground and eroding Inghams’ position. Concerns have also been raised about the strategic direction of the business due to the board's limited experience in the food industry.
Industry sources suggest possible buyers could include Japan’s Mitsubishi and Brazil’s JBS. Both have previously expressed interest in Inghams. Mitsubishi has a history of investing in Australian consumer businesses and JBS already holds several local food assets, including Primo Foods and seafood producer Huon Aquaculture. However, increasing operational expenses such as lease commitments following an earlier asset sell-down make Inghams less attractive to private equity firms at present.
Looking forward, Inghams forecasts earnings before interest, tax, depreciation and amortisation of between $215 million and $230 million for the current financial year. Performance is expected to improve in the second half of the year. Still, economic challenges like high feed prices and reduced demand from fast-food outlets continue to cloud recovery prospects. Whether the company restructures or is sold will likely depend on global interest and confidence in the long-term prospects of Australia’s evolving food sector.
