Chicken giant Inghams has blamed rooster infertility for paltry profits, as egg shortages constrain production.
The poultry producer reported on Friday a 55 per cent drop in net profit for the half to $17.2 million, $8m under analyst expectations, amid a decline in meat production.
Earnings before interest, tax, depreciation and amortisation came in at a limp $197m, down 10.6 per cent from the previous corresponding period.
"While it is clear the business is successfully transitioning from the various operational challenges experienced over the past 12 months, our farming operations are taking longer to return to normal levels, resulting in lower than required poultry volumes," said chief executive Andrew Reeves.
Poultry sales dropped 0.6 per cent from the year before despite growing demand, as lower rooster fertility contributed to a shortage of high-quality eggs and less chicken meat available for processing.
Labour shortages and the Omicron wave of early 2022 further exacerbated shortfalls.
With breeding cycles of 60-65 weeks, supply constraints took longer than expected to alleviate.
In an attempt to become self-sufficient in its supply of day-old chicks, the company announced an agreement to purchase New Zealand-based breeder Bromley Park hatcheries for $NZ8.6m.
The move comes as Inghams plans to increase investment in automation technology and a new breeder triangle in northern New South Wales.
Costs of chicken feed ingredients remain unusually high, due to the ongoing effect of Russia's invasion of Ukraine impacts wheat and soymeal supplies.
As inflation pressures continue to bite, the company warned it will pass on further price increases.
While higher prices resulted in an 8.9 per cent revenue boost, sales costs grew even faster at 10.9 per cent.
But inflation also presents an upside for poultry producers, as cost of living constraints push consumers to chicken over more expensive red meat and seafood alternatives.
"Inghams has implemented initiatives to address the reduced first half farming performance, and are seeing improving performance trend," E&P Financial retail analyst Phillip Kimber said.
"However it will be later in the second half before the benefits of more chickens are seen and the financial benefits accrue."
The company announced an interim dividend of 4.5c per share, down from 6.5c the previous corresponding period.
At noon, Inghams shares were down two per cent to $2.69.
