Ann: ING FY2021 First Half Results Presentation, page-2

'Mr Market' loved this announcement in early trade with ING shares up 3.87 per cent to $3.76 when I checked at 1035 AEDT, though they had been higher earlier.

I only listened to some of the call between the CEO/CFO/Chief Agribusiness Officer and analysts.

A chap from Macquarie summed it up by stating 'congratulations on a strong result.'

The second quarter (October to December 2020) was even better than the first quarter (July to September 2020). Encouraging!

This was however somewhat confusing as later on, an analyst contended that sales in !Q rosde six per cent that implied a rise in 2Q of two per cent, not contested by the company. Some clarification required here I thought.

I found it amazing that despite lockdowns and a curfew in Victoria, plus lockdowns elsewhere including a severe one in Auckland that almost all ING metrics have moved in the right direction, and that the interim dividend has risen to 7.5 cents per share from 7.3 cents in 1H 20.

The company has been successful in reducing inventory but about $5 million in freezer stock remains to be cleared to get it back down to normal levels. This will be achieved in 2H 21. We have to remember some of the decrease in inventory was because for a time there was less product 'coming through', such as with the Thomastown (Vic) August 2020 closure for a couple of weeks due to a worker contracting coronavirus/avian bird flu.

Retail demand was said to be 'moderating' but foodservice is returning to normal levels while quick service restaurant demand was said to be 'strong'.

ING said there had been marked changes in sales mix during COVID-19 but didn't go into huge detail.

As seen in the presentation, wheat (feed) prices have held up beyond what ING expects (a negative for the company) but the bigger rise has been in soy meal that is about 20 per cent of feed costs. ING does forward buy between three and nine months of feed but the price rises, particularly for soy meal will have an impact in 2H 21.

Normally ING has about a 51:49 per cent or 52:48 per cent split in sales/profit between the first and second halves. 2H typically has more public holidays which with plants continuing to produce chicken means higher costs in staffing on those days for ING.

The company said (sadly) Victoria 'has had a few goes' with lockdowns that result in consumer purchasing volatility at a retail level. This was probably a reference to crazy demand when say Daniel Andrews announces a sudden lockdown, and then shoppers disappear for a few days (so it seems by my visits to WOW and MTS' IGA supermarkets.) ING said demand could be 'challenging' in some weeks.

Net debt has risen $12 million or so but when I listened in (only part of the call), it was not discussed.

The major contract with WOW supermarkets is up for renewal, if I heard correctly, in 2021-22, but the CEO said there was nothing material to announce, although a couple of NZ contracts were coming up for renewal in 2H 21.

Overall, MD/CEO Mr Jim Leighton sounded very pleased with the results.