Tegel beats sales, profit forecasts

Tegel Group Holdings [NZX: TGH] had annual sales and profit that beat its prospectus forecasts.

Profit was $11.3 million in the year ended April 24, from $8.7 million a year earlier and sales rose to $582 million from $563 million. The company had forecast profit of $10 million and sales of $581 million in its prospectus. The company's financial year ended nine days before its listing.

The poultry group was taken public by private equity firm Affinity Equity Partners in April.

New Zealand's biggest chicken producer says it is "well positioned" to meet its 2017 targets, having forecast profit to more than triple to $44 million on a jump in sales to $637 million. This will allow the company to pay a dividend of between 7-11c per share.

The shares are little changed from their NZX debut on May 3, having last traded at $1.68, or 8.4% above their initial public offering price.

Domestic revenue growth was propelled by general market demand, in addition to securing two major supply contracts during 2016, the company says.

Export sales were strong in Australia, the Pacific Islands and UAE, with the launch into the food service channel in UAE providing incremental revenue gains.

"Revenue growth continues to be pushed up by strong, growing demand for poultry as a meat protein in New Zealand and globally and record sales in Tegel's key export markets," the company says. "Underlying poultry consumption continues to increase, helped by population growth and share of plate gains."

Tegel raised $284 million in its IPO, of which $129 million went to repay the existing shareholders, $130 million to repay external debt and $23.3 million on IPO and listing costs and an expensed management bonus. The company retained $1.2 million.

Tegel was taken public by its second private equity owner after Affinity acquired Tegel in a leveraged buyout from Pacific Equity Partners and ANZ Capital in early 2011. PEP had, in turn, bought Tegal from HJ Heinz in 2005.

Tegel processes about half of all New Zealand's poultry in a market where its only competitor of scale is no. 2 ranked Inghams, owned by private equity firm TPG. Smaller players include Brink's and Turk's, and the four companies have about 98% share of the New Zealand market.

(BusinessDesk)