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Appetite for chicken lifts Tegel profit

NZN 20/06/2016

New Zealanders gobbling more chicken has helped poultry group Tegel beat its prospectus forecasts.

Tegel, taken public by private equity firm Affinity Equity Partners in April, says profit was $11.3 million in the year ended April 24, from $8.7m a year earlier. Sales rose to $582m from $563m.

New Zealand's biggest chicken producer had forecast profit of $10m and sales of $581m in its prospectus. Its financial year ended nine days before its listing.

It said it was "well positioned" to meet its 2017 targets, having forecast profit to more than triple to $44m on a jump in sales to $637m, allowing the company to pay a dividend of between 7 and 11 cents per share.

The shares are little changed from their NZX debut on May 3, having last traded at $1.68, or 8.4 per cent above their IPO.

Domestic revenue growth was driven by general market demand and securing two major supply contracts, the company said.

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

Revenue growth continued to be driven by strong, growing demand for poultry as a meat protein in New Zealand and globally, and record sales in Tegel's key export markets, it said.

"Underlying poultry consumption continues to increase, driven by population growth and share of plate gains."

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 per cent share of the New Zealand market.

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