The CEO said when there'd been severe supply pressures, it was hard to implement price rises. There was a delay, but once stability returned to supply, the price rises occurred. This benefit will continue in 2H 23.
The consequences of deferring the business transformation program include taking longer to see improvements occurring, and legacy systems have to continue for longer. It can become challenging the longer it's left but not seen by ING as a huge problem.
Further restructuring costs are not expected to be material in 2H 23.
An analyst asked why ING could not recover the full cost increases: the CEO said ING has to keep working on it - there was a delay in implementing price rises. The critical issue is 'timing'.
The costs of doing business increased by 10.9pc with distribution costs rose significantly, and feed costs rose A$60 million, plus packaging up $12 million and $30 million in freight and distribution. Gas prices are rising, plus a shortage of CO2.
ING is seeing collections from debtors as a bit challenging but bad debts remain very low. An analyst claimed receivables were increasing faster than payables meaning ING had to 'carry' more working capital. The analyst said this was a secondary challenge for ING.
ING has expensed costs associated with business transformation systems but has deferred the implementation.
Half year capex was A$23.5 million (excludes expenses business transformation). The capex was a water treatment plant in WA plus the Casino, NSW new development. ING capex used to be A$80 million pa. In 2H 23, capex will be higher than in 1H23.
ING Price at posting:
$2.74 Sentiment: Hold Disclosure: Held
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