Ingham Group Sees Poultry Products Off Shelves Amid Omicron Challenges
Collins Foods ‘share price closed 3.5% lower at $ 12.30 after Inghams’ announcement. Investors punished Inghams further, as stocks fell 6% to $ 3.32 and analysts predicted a sales loss of $ 100 million.
Woolworths shares fell 2.1% to $ 36.33. The supermarket giant declined to comment and pointed to an earlier statement by CEO Brad Banducci advising customers that supermarket shelves were empty due to supply constraints. Inghams is not a major supplier to Coles.
Inghams CEO Andrew Reeves said the new challenge was “unprecedented”, with large numbers of workers unavailable for COVID-19 reasons across the company.
Inghams plans to lose $ 100 million in sales
“The operational and commercial difficulties have resulted in significant operational inefficiency, additional costs and the temporary suspension of a number of Ingham’s products,” Mr. Reeves said in a statement to the stock exchange.
“Ingham’s works closely with our customers and we are focused on delivering as many products as possible to customers as the current disruption continues.”
Inghams said his main sites remained operational and were not at risk of any outbreaks but, as many workers were unavailable due to COVID-19 reasons, he had made changes across the company to cope.
The main issue for Inghams is with products that require additional production effort, with the focus now shifting to the core business of preparing whole chickens for supermarket shelves.
The chicken farmer did not quantify the exact record of his income, saying instead it was “premature to draw any conclusions” in an ASX statement. Citi analyst Sam Teeger said he could lose $ 100 million in sales this quarter.
Teeger said this was a conservative estimate – taking into account the new relaxed isolation rules for food production workers and the company’s resilient track record – and amounted to around 4% of total sales. .
But he warned that the percentage impact on operating profit would likely be over 4% due to production inefficiencies, additional costs and potential headwinds from inventory.
Mr Reeves hailed the new changes that would allow asymptomatic close contacts who work in critical food production and distribution roles to return to work if they regularly produce negative rapid test results.
“[This] should help alleviate some of the current staff shortages. As operating conditions begin to stabilize, we expect our production capacity to recover relatively quickly to meet customer and consumer demand, ”said the CEO.
But the company warned that there was no certainty on the length of the show.
“It is currently not possible to predict how long this disruption will last,” Inghams said. “It is therefore premature to draw conclusions about the overall impacts on business and commercial results. “
Inghams is far from the only company with staff issues – Virgin Australia has said it will cut nearly one in four flights from its schedule starting in late January as the omicron strain tears staff apart.
Retail Zoo, owner of the Boost Juice and Betty’s Burgers et al brands, also said it needed to close and / or change the operating conditions of a handful of outlets as workers contract the virus.
The rapid spread has prompted calls to extend the relaxed isolation restrictions for critical food production and supply chain workers to other industries, particularly the hospitality and retail sectors. .