Ridley (ASX:RIC) reported a stronger first-half result, supported by growth in bulk stock feeds and a three-month contribution from its newly acquired fertilizer business, while packaged feeds and ingredients faced several short-term disruptions that weighed on segment earnings.
First-half earnings and dividend
Managing Director and CEO Quinton Hildebrand said the company delivered first-half underlying EBITDA of AUD 55.4 million, up 9% on the prior corresponding period (PCP). The result included three months of earnings from the new fertilizers segment and a “strong performance” in bulk stock feeds that offset a softer outcome in packaged feeds and ingredients.
Segment performance: bulk stock feeds strong, packaged and ingredients disrupted
The bulk stock feed segment delivered EBITDA of AUD 27.1 million, up 25% on PCP. Hildebrand noted the comparison included an earnings headwind of AUD 1.7 million in FY25 from the Wasleys Feedmill, which was sold on 30 June 2025. Volume growth drove the improvement, with 13% growth in ruminant sales and 7% growth in monogastric sales. Hildebrand also cited higher-margin supplementary feeding early in the period and said Ridley DIRECT, now in its fourth year, generated profit by leveraging procurement flows and broadening its customer network.
The packaged and ingredients segment saw EBITDA fall 28% to AUD 25.6 million. Management attributed the decline to several short-term factors, including:
- Ovine supply constraints at OMP due to lower lamb slaughter rates, impacting sales
- Lower prices for protein meals compared with the prior year
- Temporary processing challenges at Maroota, where a rain event caused a slip in the main cooling dam wall, making the dam inoperable and forcing diversion of material and additional costs
- Commissioning delays at OMP’s new Timaru greenfield facility, which impacted daily throughput and yields
Despite those issues, Hildebrand said raw supply volumes to the rendering plants increased 7%, and packaged dog sales grew 7%, filling extrusion capacity “vacated from the Aquafeed transition.” He said the issues should “correct” through the second half as additional lamb bone supply has been secured and capital projects address processing constraints.
Fertilizer segment beats expectations; integration steps underway
Ridley’s fertilizer segment delivered EBITDA of AUD 10.3 million over the three-month ownership period, which Hildebrand said was above the top end of expectations and above PCP under the previous owner. Management attributed the result to cost control and margin management during what it described as the lowest seasonal demand quarter.
In Q&A, management said fertilizer volumes in the period were “slightly lower” than PCP, but the shortfall was more than offset by margins and cost control.
On integration, Hildebrand said Ridley has “flattened” the fertilizer organization by appointing regional general managers across five regions, each responsible for sales and execution through distribution centers. The restructuring will remove 45 roles and is expected to reduce costs by AUD 8 million per annum from FY27, with a one-off cost of around AUD 3 million in FY26.
The company also expects to migrate from Dyno Nobel’s SAP platform to Ridley’s Microsoft Dynamics platform in calendar 2026 at an estimated cost of AUD 30 million. Hildebrand said the project should release corporate synergies of AUD 7 million per annum from calendar 2027.
Balance sheet, working capital, and acquisition accounting
Betts said the balance sheet changed significantly following the acquisition and related debt financing. Excluding the acquisition, he said working capital reduced by AUD 72.5 million during the period. Property, plant and equipment increased by AUD 15.3 million, primarily reflecting growth projects including OMP’s Timaru facility and debottlenecking projects in both bulk stock feeds and rendering.
Net debt reduced by AUD 22.4 million, driven by improved EBITDA and lower working capital, partly offset by higher capital expenditure, dividends, and tax and interest payments. Betts said covenant bank leverage was 0.8 times, “comfortably within” covenant levels.
Betts said the company acquired AUD 387 million of working capital with the fertilizer business, consistent with typical September levels and additional inventory associated with shifting the Geelong single super phosphate (SSP) business to an import-only model with a longer supply chain. He said fertilizer working capital subsequently reduced by AUD 98 million, driven by receipt/payment timing and management focus on aligning with seasonal cycles.
Ridley increased available funding lines by AUD 500 million to AUD 690 million, including a AUD 200 million revolver facility and a new AUD 300 million working capital facility. Management said fertilizer working capital is expected to rise into peak season, potentially around AUD 200 million above December levels, funded through facilities.
Regarding acquisition accounting, Betts said total consideration for the fertilizer business was AUD 433 million, including a cash outlay of AUD 357 million, higher than initially reported due to higher working capital and SSP-related inventory. He said fair value of assets acquired was assessed at AUD 489 million, primarily working capital, resulting in a provisional gain on bargain purchase of AUD 56 million. Acquisition costs of AUD 17.8 million and project office/IT integration costs of AUD 1.7 million were also recorded. The company also incurred AUD 5 million related to unwinding an inventory step-up; Betts said the net effect on profit was nil. Overall, Ridley reported net individually significant gains after tax of AUD 31.4 million related to the acquisition.
Outlook: second-half recovery in packaged and ingredients; Strategy Day planned
Hildebrand said Ridley expects FY26 earnings growth to be driven by nine months of fertilizer contribution (including seasonal peak demand in the second half), increased market share and volume-related efficiencies in bulk stock feeds, processing improvements in packaged feeds and ingredients from capital investments, and “modest” commodity price recovery in the second half.
In Q&A, management reiterated it still expects “modest” full-year growth in the core business (excluding fertilizer), supported by momentum in bulk stock feeds and improvement in packaged and ingredients in the second half. However, Hildebrand said it would be “too optimistic” to expect packaged and ingredients EBITDA to grow in FY26 versus FY25, though the company expects a better second half than first half.
Ridley plans to present a FY26-FY28 growth plan at an Investor Strategy Day on 10-11 March 2026, including site visits and additional detail on the fertilizer integration and footprint optimization opportunities.
About Ridley (ASX:RIC)
Ridley Corporation Limited, together with its subsidiaries, provides animal nutrition solutions in Australia. It operates through two segments, Packaged Feeds and Ingredients, and Bulk Stockfeeds. The company provides feeds for horses, chicken and poultry dairy cattle, beef cattle, sheep, goats, alpacas, llamas, kangaroos and wallabies, guinea pigs, rats, and mice; monogastric and ruminant commercial feeds; aquafeed for salmon, prawns, barramundi, yellowtail kingfish, and trout, as well as mulloway, silver perch, and other native species; and rendered poultry, red meat, and fish products.
