New Zealand’s largest poultry producer Tegel Group has lowered its full-year profit guidance after reporting a mixed first half, news that prompted its shares to fall almost 17% on the NZX today (15 December).
In its latest financial update, Tegel lowered its full-year net profit outlook to a range of NZD33-41m (US$23.3-29m). In its prospectus, released to investors in March, the poultry processor had predicted net earnings of NZD43.4m. The group also said it anticipates underlying EBITDA will be NZD75-85m for the full year based on current market conditions.
Delivering its first half results, Tegel nevertheless reported “strong” revenue and volume growth in the period to 23 October. The group said volume increased 6.9%, driving a 4% rise in sales to NZD296.3m.
“We are continuing to see strong category consumption growth and we are working hard to ensure Tegel is well positioned to take advantage of this now and into the future. Poultry is the most consumed meat protein in New Zealand, and this is growing at around 5% per annum,” Tegel CEO Phil Hand noted.
During the period, the company said it increased its share of New Zealand poultry sales by around 2%. The company attributed this to increased investment in the Tegel brand through a new pack design, new corporate branding and media campaigns as well as product development.
Tegel will launch a total of 29 new products in its full financial year, including the expansion of its free-range line.
Tegel also continued to invest in agriculture and processing assets in the half, with total capex standing at NZD15.9m.
Selling prices were, however, down in the half due to prevailing market conditions. This impacted profit margins and underlying earnings before interest and tax (EBITDA) declined 4% to NZD35.1m in the period, the group revealed. Net profit, however, increased by NZD9.1m to NZD15.1m.
Shares in Tegel closed down 16.77% at NZD1.29.