Interest rate cuts to spur chicken and takeaway sales: Inghams

Australia’s largest chicken producer Inghams expects the rate cut will help ease cost-of-living pressures and boost sales at fast-food chains and restaurants.

The interest rate cut should help fast food and restaurant sales. Picture: Brenton Edwards

The boss of the nation’s largest chicken producer, Inghams Group, believes the start of interest rate cuts should reduce cost-of-living pressures for households and help boost sales at fast-food chains, pubs and clubs.

Tighter family budgets over the last 18 months have led to consumers switching from picking up a bucket of fried chicken from their favourite fast-food chain to buying chicken at a supermarket to cook at home, but Inghams chief executive Andrew Reeves now sees the green shoots of a revival in takeaways and restaurants.

“We are actually seeing quite strong sales in retail channels, being the major supermarkets, so for our business they are up low single digit, which is pretty healthy and in fact, in recent months, have been accelerating,” Mr Reeves told The Australian.

“On the quick service restaurant (fast food) side, things are still subdued, but we are seeing some stabilising, so the declines have certainly moderated, and in fact there’s some green shoots there, where we are optimistic that over the next 12 months we will start to see those channels back in growth.

“This week’s interest rate cut, while not huge in itself, is hopefully going to have a positive impact on consumer sentiment, and if we are at the start of an easing cycle, that should be positive for sales in the outlook.”

Inghams on Friday posted an 18.8 per cent fall in interim net profit to $51.5m. The company lowered its interim dividend by 1c to 11c per share.

Inghams, the largest poultry producer in Australia and New Zealand, is the key seller into supermarkets, pubs, clubs, cafes and fast-food chains and has witnessed strong movements in consumer spending over the last two years as households look to stretch their budgets. People have cut spending at restaurants and fast-food chains and traded down from more expensive red meat to cheaper chicken.

However, Inghams’ sales for the December half fell 1.9 per cent to $1.61bn as core poultry volumes decreased 2.7 per cent.

That was partly due to a new Woolworths supply contract, but the company said it had brought in new business equivalent to about 75 per cent of the volume reduction flowing from the supermarket deal. Mr Reeves said he was confident the company could make further progress in closing that lost volume gap.

In its key Australian market, core poultry volume declined 4.1 per cent due to a temporary reduction in the number of birds processed to manage inventory levels and the transition to the new Woolworths supply agreement.

Retail (supermarket) channel growth was offset by declines across fast food, wholesale and export.

Inghams lifted its prices by about 1.5 per cent in the last six months, with the worst of the spike in its business costs led by chicken feed behind it and the costs of wheat and soybean meal now retreating from recent highs.

Inghams reaffirmed its full-year guidance of earnings between $236m and $250m, representing flat to 6 per cent growth.

The company said core poultry volume is expected to be marginally lower than 2024 due to the phased introduction of the new Woolworths supply agreement, the timing of commencement of new business, and the ongoing effects of cost-of-living pressures on consumers.

The Reserve Bank of Australia on Tuesday cut the cash rate for the first time in more than four years.