Inghams settles in to stable growth with new management team

By Peter Bedwell
The last few years has seen more changes to the 100 year old Inghams company than at any time in its long history.
In March 2013, the surviving brother Bob Ingham, sold the family business to US based private equity company TPG for a reported $880 million.
Other suitors were Blackstone and Affinity, both PE organisations and Chinese agribusiness, Blue Group.
TPG appointed Mick McMahon as the Managing Director to lead the company into the ASX as a listed public company.
Key elements to make Inghams attractive to investors were ‘Project Accelerate’, an efficiency productivity and infrastructure upgrade program and the completion of a long term supply contract with leading retailer, Woolworths.
TPG retained 47% of equity in the company after the initial float and there was a further sell down in April 2019, leaving TPG with a 19% holding.
Having completed what most in the finance community regarded as a successful float and transformation of a traditional family owned enterprise into a major ASX listed company, Mr McMahon left the company in August 2018.

Inghams CEO Jim Leighton (right) with Craig Haskins, Inghams Investment Relations Director.

The Chief Commercial Officer Quentin Hildebrand, assumed the acting CEO role until the new CEO Jim Leighton was appointed in late 2018.
Ingham’s Chairman Peter Bush expressed great satisfaction at having found Jim Leighton to run Inghams at the time of the appointment.
“His long experience in food and poultry industries in the US made him the stand out candidate,” Mr Bush told the financial and agricultural press at the time of the appointment.
Jim Leighton has worked with major North American food companies at all levels in the supply chain and subsequently held key management roles in major poultry producers like Perdue Farms, Pilgrim’s Pride, owned by JBS and Boulder Brands marketing specialist dietary products.
He became the founding President of 40North Foods, a start up venture backed by Pilgrim’s Pride and JBS, specialists in food brand innovation.
Poultry Digest met Jim Leighton for the first time at the official opening of Ingham’s new feed mill at Murray Bridge on February 20, 2019. (See the Feb/March 2019 edition).
The new mill has subsequently been sold and then leased back from Corval Investments which increases Ingham’s feed capacity in SA to 11,000 tonnes per week. The mill operates on a 24/7 basis and is highly automated.
We briefly discussed plans for the future of Inghams and Mr Leighton promised a further interview as his strategies for the company unfolded.
On December 9, 2019, he made good his promise and Poultry Digest sat down with Mr Leighton and Inghams Investment Relations Director, Craig Haskins, at the company’s North Ryde headquarters.
On October 22, 2019 Inghams held an investor day where Chairman Peter Bush and CEO Jim Leighton were joined by senior members of Inghams’ management team, many of them recently appointed to their present positions.
Many of the ideas presented at that event became the subject of discussion, including the many differences between the Australian market and developed markets in the UK, Europe and North America.
“Market segmentation has become a more critical feature in those markets and now Inghams has to better adapt 
to a changing protein market as customer expectations evolve,” Mr Leighton said.
“We have the advantage of long term customer relationships with a consistency of demand and for our customers in both retail and the QSR sector, certainty of supply.
“Our new management team has an established track record of driving innovation and profitable growth in food and protein.
“We are faced with challenges I am very familiar with facing. Our success in growing volumes has stretched our operating capacities and our focus was to be a supplier rather than a strategic partner in growth.
“To deal with these challenges, our structure and leadership needed a refresh,” Mr Leighton added.
“We need to innovate to grow and build poultry/protein products delivering sustainable margins and offsetting cost base volatility.
“By becoming a consumer centric organisation, we can work with our customers in new ways to help support their growth as well as ours by investing in new value-added products and channels.”
Mr Leighton described a consumer needs-based model that matched real life consumer food needs such as heat and eat, the weekend entertainer, good for me and the planet, as well as for the confident cook.
“With sustained demand growth for poultry continuing, immediate sales objectives are stronger collaboration between strategic partners, to maximise the value of every bird and to improve collaboration with operations to profitably utilise latent production capacity,” he said.
“Our new state of the art research farm, recently commissioned in Queensland to deliver R&D for feed and farming initiatives in a controlled environment, will be a key asset to deliver on our goal to be the leader in consumer protein innovation and growth.
“It will support the consumer innovation pipeline by staying ahead of the curve in chicken production efficiency as well as de-risking the raw material supplies we utilise.
“We can evaluate novel and new ingredients and animal health products and support ag tech initiatives for farming in general.
“A case study on ‘unlocking latent capacity’ was that an internal review identified spin chillers as the major bottleneck impacting plant throughput at our Somerville (Victoria) and Osborne Park (Western Australia) primary processing facilities.
“New spin chillers will double capacity at each facility and unlock an incremental 20% improvement in network capacity to support future growth.
“Inghams New Zealand short term priority initiatives are the complete rebuild of broiler farm infrastructure with a continued improvement in operational efficiencies and performance.
“Further development of the free range Waitoa brand and to keep a watching brief on IBDV, are also imperatives for Inghams NZ operations,” the company brief to investors stated.
When Primary Media took over Poultry
Digest in 2000, the consumers’ main concern about protein was cost and chicken was tearing into the domestic red meat market based on just that advantage.
Inghams had grown alongside the expansion of supermarket retail with Woolworths as both companies achieved market dominance.
Westfarmers take over of Coles changed all that and an influx of UK ‘big retail’ trained management into the senior ranks first of Coles, then Woolworths, changed a uniquely Australian ‘big retail’ landscape.
A harder approach to suppliers by retail included demands for more than just a cheap protein source.
Free Range, organic and more recently antibiotic free, vegan fed diets and slow growing genetics, have all become facets of 2020 perceived consumer demand.
Jim Leighton and the members of his management team with international experience have been in the middle of these consumer trends – driven with gusto by the new breed in retail who perceive sales advantage in more specific consumer requirements.
In markets even more competitive than the current Australia/New Zealand retail sector, particularly the US and UK, production efficiency to gain every cent of profit out of birds is vital.
The new Inghams management team, with Jim Leighton leading it, is well positioned to work in the current retail landscape and with changing consumer food imperatives.
The sale, then floating of Inghams on the ASX, created huge interest in the Australian investment community at a time in 2016 when mergers, acquisitions and IPOs were few in number and not particularly exciting.
Inevitably Poultry Digest receives many inquiries from both other media and those with a financial interest in the industry.
In discussing this fairly intense interest in Inghams, the question was asked ‘Will Jim Leighton’s appointment have a beneficial effect on the performance and future at Inghams’?
Overall, given the impressive international experience of both Jim Leighton and his team, it is reasonable to believe that Inghams performance will continue its upward trend.