Full Year 2026 Ridley Corporation Ltd Earnings Call Transcript
Key Points
- Underlying EBITDA surged 61.8% to $157.8 million, driven by strong contributions from the newly acquired Fertiliser business and growth in Bulk Stock Feeds and Packaged Feeds.
- The acquisition of Incitec Pivot Fertilisers was completed at a favorable price, resulting in a gain on bargain purchase of $37.5 million and a step-change in earnings base.
- Headline leverage was a low 0.85 times, well below the anticipated 1.3-1.4 times, reflecting strong cash generation and providing balance sheet flexibility.
- The Fertiliser business delivered a pleasing $72.2 million EBITDA in its first nine months, with effective sourcing of urea supply and higher margins despite lower volumes.
- Bulk Stock Feeds achieved 5% EBITDA growth, driven by 7% volume growth in monogastric and 4% in ruminant sales, supported by successful procurement strategies.
- Packaged dog food grew 33% through new private label contracts and improved plant throughput, highlighting a bright spot in the Packaged Feeds segment.
- Integration of the Fertiliser business is on track, with the new regional model delivering cost savings and the ERP migration expected to yield benefits in FY 2027.
- The company maintained a progressive dividend policy with a final dividend of $0.0535 per share, fully franked, reflecting a 64% payout ratio.
- Strategic initiatives such as the Lara feed mill expansion and UAN repurposing are progressing, positioning the company for future growth.
- The company expects earnings growth in all segments in FY 2027, driven by full-year Fertiliser contribution and recovery in Packaged and Ingredients.
- The Packaged and Ingredients segment underperformed, with EBITDA down $11.4 million year-on-year due to operational issues at Maroota and Timaru.
- A non-cash impairment of $28.7 million was taken on Novaq Pro assets, reflecting slower-than-expected commercialization and geopolitical disruptions.
- The company faced operational challenges including a dam failure at Maroota that was inoperable for the full year, and design issues at the Timaru plant that hampered commissioning.
- Ovine raw material supply constraints impacted the Ingredients business, as lamb slaughter numbers were down across the industry, increasing competition for supply.
- Net finance costs increased significantly by $22.5 million due to funding the acquisition and non-cash interest on finance leases, impacting profitability.
- The statutory effective tax rate was 33%, higher than the underlying rate, due to temporary differences from the Fertiliser acquisition.
- The company incurred significant one-off costs of $33.8 million after tax for acquisition and integration, including $13.3 million on IT integration.
- Fertiliser volumes were lower as high global prices led farmers to reduce demand, partially offsetting margin gains.
- The start of the FY 2027 fertilizer season has been measured, with lower demand as some buying was pulled forward, and the Phosphate Hill offtake contract extension is still under discussion.
- The company's total shareholder return was lower for FY 2026, with the share price closing at $2.65, though it remains above the long-term target.
Thank you for standing by and welcome to the Ridley Corporation Limited full-year 26 results presentation. (Operator Instructions)
I would now like to hand the conference over to Mr. Quinton Hildebrand, Managing Director and CEO. Please go ahead.
Thank you. Good morning to you all, and thanks for your attendance today. Chris Opperman and I will be pleased to provide you with our financial performance for the 2026 financial year and the progress that we have made on the strategic front. We will be talking to the slides that were uploaded on the ASX website this morning, starting at page two. FY 2026 was a year of growth for Ridley. We purchased the Incitec Pivot Fertilisers business, successfully acquiring just the distribution business and getting it for a good price. Today, Ridley is a truly diversified agricultural business, providing more resilience and significant opportunity. Importantly, we operate at scale with the number one position
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