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AAP
AAP
Derek Rose

Woolies trims chicken deal but Inghams says it's paltry

Inghams will sell less poultry to supermarket giant Woolworths under a new supplier agreement. (Dan Himbrechts/AAP PHOTOS)

A rise in supermarket sales has helped chicken supplier Inghams navigate cost-of-living cutbacks on fast-food dining.

However, those salad days have been hit hard with Inghams reporting that its biggest customer, supermarket giant Woolworths, has cut a new supply deal which reduces the amount of product it will buy.

The poultry producer expects to sell one to three per cent less chicken in 2024/25, partly because of the multi-year Woolworths agreement.

Inghams said the amount of poultry it sold in Australia last financial year rose by 1.9 per cent to 405.5 kilotonnes, with an 18 kilotonne rise in retail channels more than offsetting a 4.4 kilotonne drop to quick-serve restaurants.

"The key long-term fundamentals supporting the poultry sector remain in place, with poultry continuing to be the affordable protein of choice for consumers," chief executive and managing director Andrew Reeves said.

Revenue climbed 7.2 per cent to $3.3 billion following price hikes in response to significant inflationary cost increases borne by the business, with Inghams' net selling price climbing 5.4 per cent to $6.28 per kilo.

Inghams' profit for 2023/24 was up 68 per cent to $101.5 million.

It will remain Woolworths' main poultry supplier under its new deal with the supermarket giant.

Mr Reeves said Inghams had opportunities with other customers it was working on and the new deal was a manageable change.

"It's a one-time step-down," he told analysts on Friday, several of whom voiced concern about the new arrangement.

"We will still have the opportunity to grow with Woolworths as their business grows.

"It's not going to put that sort of pressure on our system that we've got to go and just dump volume on the marketplace. That's not going to happen."

Woolworths wants to add more poultry suppliers to its mix, not because of pricing issues, but to guard against disruptions, Mr Reeves said.

"It's very much a response to the experiences that we all had through the last couple of years of disruption," he said.

"They have, quite rightly, a very high priority on their customer service levels and security of supply."

Inghams shares were the worst performing of any in the ASX200 on Friday afternoon amid concerns about what the new deal might mean for the company, falling 19.6 per cent to a one-year low of $3.11.

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