Very much, and good morning, everybody. Thank you for joining the call. And welcome to our first results as a public company. Whitney this morning is Ian Brandt, our CFO, and we'll run through, the material that's been low to the ASX and overview of the results, we'll go through the detailed financials, an update on implementation and strategy and how we see the period ahead and then leave plenty of time. For questions.
So the key point to make from the result is that we've delivered very strong volume growth. And our financial performance is in line with the prospectus forecasts. And that volume growth is in Australia and being primarily driven by growth in retail and QSR quick service restaurant customers who are very much investing in chicken as the healthy competitive proteins. So I guess consistent with the long term trend that as other proteins become more expensive than we're seeing growth in chicken and especially so Over the last period, we're seeing customers investing in everyday low pricing and driving chicken in the face of rising red meat price in particular. We've delivered our results in the first half despite continuation of the challenging New Zealand market conditions.
Driven by oversupply. In that market, that's consistent with our expectations at the IPO as we would have previously commented but nonetheless that market dynamic continues. And we'll say a bit more about that later on. And we're pleased to say that we're translating that volume growth through to profitability increase despite some of the supply chain challenges that come from rapid growth. So in an integrated supply chain, live birds fresh products, and growth in particularly some SKUs can provide imbalances in the business.
So we've been able to manage all that and continue to deliver improved profitability. Our strategy continues to be implemented and is delivering in line with expectations. We're leveraging now the 1st phase automation projects that were implemented in our primary processing plants. That has enabled us to support the volume increase in Australia. And we're seeing the benefits of that automation come through.
We closed the card of plant in New South Wales and, transferred the volumes to other plants. And we continue to make good progress on on labor procurement and other initiatives, which I'll go through in more detail shortly. We continue to extend our key customer contractual coverage in Australia, for instance, we have over 2 thirds of our volume, covered by contracts ranging from 2 to 5 years and we're essentially extending the tenure of those contracts formalizing, previously informal, largely informal supply arrangement and we continue to extend that and extend the, or improve the detailed terms, if you like, things like fee prices and other. Adjustment mechanisms. And we have continued to build our capabilities.
So as we continue to take Iniums from a very long and successful history as a family business to a modern, growing public company We've continued to invest in capability through all parts of the business, particularly operations and in category management, marketing, new product development and the like. Capital investment peaked in the first half as we would have previously flagged And a lot of the investment that's gone in is now starting to be productive with the Hattery and breeder expansions in South Australia coming online. And we continue to invest in, both expanding the capacity of the business and building capability that we'll get through. In a few moments. And, to finish the overview, if you like, we confirm that the outlook is unchanged and consistent with the prospectus forecast.
Turning to the financials. From a financial point of view, first of all, volume growth was very strong. Overall, poultry volume growth for the group at 12.9%. It's important to break that down for a reason that I'll explain. The chicken and turkey growth, grew at 9% for the group.
The difference is ingredients product that goes off to, for instance, a pet food or other. Or other uses and we saw rapid growth in ingredients volume more as a result of a change in the way we do some business at one of our plants where instead of rendering and selling the end product, we're selling the raw ingredients. That has the effect of amplifying volume and distorting the overall volume number, hence, where you'll see us breaking out the core chicken and turkey product growth, as we go through. So you can look through that. And see the underlying chicken and turkey growth, which for the group, as I said, is 9%.
Volume is a key driver in this business, more so than revenue, revenue grew at 4.3, reflecting both volume increase, up and fee deflation, deflating revenue as we've said before, feed prices lies. We get passed through to customers and you can see that, in the revenue change. And, from an EBITDA and profitability point of view, EBITDA grew 9.1 percent to $95,200,000, roughly half our full year forecast and net profit after tax grew 13.8 percent to 51.3. All of these are on a pro form a basis consistent with the prospectus forecast. Net debt reduced from the point at IPO to 403,400,000 And we expect that to continue to decrease through the second half, consistent with our expectation that we discussed in the IPO and that puts us in a position to declare a stub dividend of $2..6 a share, which is 65 percent of MPAT period for the period since IPO.
On a segment basis, turning first to Australia, and again, you'll see that very strong volume growth in poultry volumes. And overall 15.6% to 10.5% for chicken and turkey excluding ingredients for the reason that I mentioned earlier. That growth, as I said, creates some challenges. If you like, we still do extract some of the operating leverage from that growth because early on, we do our best to meet customer requirements and deliver that growth. And we do say we're at times extended over time extended shifts.
As well as having to rebalance our business, to, to take account for growth in particular SKUs of course, chicken is a business where we need to balance the bird right through the supply chain. So as that volume increase settles in, we would expect to gain more of the benefit of that volume over time. At the same time, we're managing a very high degree of change in the business as we not only handle that volume, but implement our project to accelerate initiatives and and the capital projects. Within retail, a very strong growth right across the customer base, as we said, customers investing in everyday low pricing on chicken in the face of rising costs of other proteins. Will have all seen a $9 breast fill at $7.90 or $8 barbecue birds And that's continued into the last week or so where we're seeing $10.50.
So I feel it's out there as well. So We're certainly not seeing any slowdown in customers investing in chicken to grow their own sales and to deliver value to their customers, which is ultimately good for us. We have rolled out in Australia, the brand refresh and the new packaging, and that will roll out through New Zealand through the second half. And as we said earlier, we've ramped up innovation and new product development activity to meet changing customer requirements. And extended supply contract coverage in the retail space.
Well, interestingly, I think most people will have seen a lot of that retail activity in the marketplace, but we've also seen very strong growth from our quick service restaurant. Our customers all so driven by chicken as the healthy, competitive good value protein. So that combination of retail and QSR grade is what's, is what's driven the growth in Australia. Foodservice volumes are in good shape, but more of a positive flat versus last year as we move to meet that growing demand in retail. QSR.
And we do have one key quick service restaurant agreement on the negotiation, as we would have mentioned in respect to the period that those discussions continue. In the wholesale market, remembering that we don't do a lot into the wholesale market, most of our volume is contracted supply to the large customers. But the East Coast market through the first half, was reasonably soft in terms of margins as a lot of product was cleared, what we call fallout or product that you produce in order to produce the breast fill ups, the barbecue birds, the thigh fill ups, etcetera, being cleared through the wholesale channel in some cases. We are seeing those wholesale margins improving as we enter the second half. And export volumes, export primarily remains a clearance strategy for us.
Here in Australia. We also call out there increase in feed volumes. So we're seeing feed volumes increase. These are third party volumes or or volumes to 3rd party customers. That was consistent with our forecast.
There was one customer contractually dropped off at the end of the first half. So we'll see come back a bit in the second half, but, feed volumes in good shape, in Australia. So improving EBITDA in Australia, but as per previous commentary, a fair way to go to get to in the sort of level that we would expect the EBITDA margin to be. And that's a large part of what our strategy is in terms of project accelerates and continuing to invest in the to get ourselves towards double digit EBITDA margins, which is where a business like this should be. New Zealand is a very different story again, consistent with previous commentary, at the IPO challenging conditions in that market, we see it very much as being over supply.
Our volumes, however, are flat. There are 2 large players in New Zealand, so our volumes are flat and the volumes coming from elsewhere. And, you'll see there we've inserted a graph that just shows New Zealand government statistics for exports And there's a total industry export volumes from New Zealand that would include our volumes to, where we export some product to PMG and the Pacific Islands, but you'll also see the drop off in volumes to places like Australia and not much growth elsewhere. PNG and Fiji, for instance, you can't export to from Australia for various reasons, but we can from New Zealand. So there's been some growth there as Australian exports dropped off into those markets, but you'll see the trend in exports.
We think that those export volumes or volumes that should have been going to export from some, competitors are finding their way back into the domestic market and, pausing or contributing to that oversupply. From our point of view, our strategy has been to not add to that oversupplying that market to moderate volume growth. And to focus on free range and differentiation of product, which we've been doing a very good job with White Tah, the leading free range brand in New Zealand and very tight operational performance to offset that impact. We're not yet seeing any material change in that that New Zealand market dynamic and to repeat what we would have said at the IPO, we're not relying on any improvement, in New Zealand to deliver our prospectus forecast for this year. It'd be nice, of course, to see an improvement in that market, but we're not relying upon it.
The feed business in New Zealand has a very high dairy feed component, the 3rd party feed sales. And that's a product or or related to, the health of the the dairy price and, not approximately with dairy prices where they've been, dairy seed volumes and margins were low through the first time. Some of that we are seeing in improvement. Turning to the detailed financials, and I'll hand over to him.
Thank you, Mick. On page 8 of the presentation factors, the pro form a profit and loss. This is the half twenty seventeen versus the same period a year ago. In the Australian volumes have certainly uplifted the total revenue by $50,000,000 taking us to just over $1,200,000,000 at the half year. The, as Mick said earlier, the revenue, as increased 4.3% and that does reflect the reduction of the feed prices along with some mix as we've we've had all the volume going through in terms of the raw spur through the Australian business.
Pleasingly, the gross profit has increased And now that that sits at 18.7 percent overall. And really this reflects not only the strong volume growth for the Australian business, But pleasingly, the project accelerate has actually delivered as we expected. That being said, that's all delivered in accordance with the fact that we are rebalancing the network with the strong volume increase through the Australian business, but overall, a strong result. That in turn drives the EBITDA And as you can see on this chart, we've grown the business at 9.1%. And more importantly, at a net profit after tax, we've grown 13.8% and this reflects lower financing costs with the new facilities that we put in place at the IPO.
And also, the fact that we've got tax expense at the same effective rate as we add in the prospectus you'll see that tax expense is slightly elevated versus prior year, but that reflects the increase in earnings. I go to page 9, which is the pro form a cash flow and balance sheet. Cash flow from operations at $79,200,000 is a cash conversion rate of 83.2 percent, which is an increase versus the prior year. We basically run into that half year with the November, December period, which is a very busy and strong time for the inghams business. The November, December period obviously runs into Christmas and the holiday period.
And because of the timing of the the close off of the half year, which was the 24th December. That does cause some issues in terms of timing of cash flow and receipts from customers. But effectively, the key driver of working capital increase is the increase in trade debtors. Predominantly by increased trading. But like I said, the timing of the half year closed is kind of correct that impact in the half year.
Pleasingly, inventories in working capital have reduced from June And payables are starting. We're starting to see the progress that we kind of highlighted at the IPR and that's starting to work through. That in turn, we had a first half where we expected capital expenditure to be higher and it it peaked in the first half, approximately $68,000,000, $60,000,000 of that is what we call the annuals capital. The $8,000,000 realized third party capital, that is for recovery through the sale and leaseback arrangements. You can also see there we've got insurance and third party capital and that relates to the Hamly Bridge Insurance claim where the the facility was lost in the bush fire just over a year ago and also third party capital where the agreement are in place and the funds are yet to be received.
All in all, the even though we've had a peak of capital expenditure in the half year, we seen net debt reduced to $403,000,000, which is a reduction from listing and a net debt to the EBITDA of two 0.3 times. Thank you, Mick.
Okay. Thanks, Ian. So turning to a quick update on progress on strategy, all of which is is consistent with, we were at the IPO a few months ago. But a reminder, first of all, that, our goal with the EM system is to build a great company into a world class food company. For most of our nearly 100 years of history, it's been good enough to be the best in Australia and New Zealand.
I think for much of that history in EMEs have been. But increasingly our customers are international and, we need be, to ensure that we're on top of what's going on elsewhere in the world and able to deliver that here in Australia and New Zealand. So you'll see there, ims have a great heritage of delivering quality and service to our customers. We're building on that culture. It is a good culture in im and continuing to build it into a world class food company.
Consistent with that, turning to project accelerate on the next page where pathway through a longer year transformation program. If you remember, 3 to 5 year program, We're getting on for a couple of years into that now. It's a couple of underlying and making sure we capture the underlying market growth ensuring that we build strong foundation within rooms where there's been a lot of investment both in management capability, in capability through the business, improving IT strengthening planning and ensuring we've got very strong network plans and putting that capital investment into capacity and productivity. But been driving hard at 1st phase of project to accelerate $160,000,000 in benefits being targeted from very specific projects, labor productivity, automation procurement, network rationalization, turning around the Turkey business and supply chain. And then beyond that, a series of opportunities that we see, but not yet, we haven't yet got to in terms of driving from.
If we go over to an update in terms of Project Accelerate, first of all, with automation, a lot of investment in automation within our primary plants in particular. And through the half, looking to leverage that investment, particularly in automated deboning through our big Australian primary plants, world class deboning equipment, which is all in and operating and delivering benefits. And as mentioned earlier, has supported us in handling the very strong volume increase in this market. We've got we're also, we've got more in the pipeline and more automation activity to go, whether that's further deboning equipment. Automated portioning equipment to support value added requirements for customers.
Doing a similar automation activity in New Zealand and also adding to, automated case packing palletizing And the light can also be turning more attention to our FPA or a cooked product plant. At the same time, we're continuing to invest in things like tray packing, top leading, live bird handling systems and other things to meet customer or welfare requirements, in addition to what we call a debottlenecking of our main deployment. So as we put in automation, as we handle the volume increase, I'm sure we're, we're optimizing the operation of those. Plans. So very good progress on automation and more to go.
From a labor productivity point of view, good progress on renegotiating EBA agreements at our primary plants and pleased to say that we have agreement at all of our at Tayra in New Zealand, Maravi, and Summerville, would be some of the ones just pending Fair Work approval, but the others are off and are running. And our approach there has been to negotiating in good faith without people prepared to pay for productivity improvements, but we must get productivity improvements very important to this business, and we're being successful in doing that. And over the coming period, we'll start to leverage some of the the flexibility that those new EBA's give us, things like moving to 10 hour shifts, and the like. That program will continue now for the smaller plants and on into the FP plants and the like. But we have the big plants, we have the big plants behind us.
At the same time, we're improving our ability to manage labor on a detailed basis. And although at the same time we've had to absorb some of that extra volume through extended hours and over time, but that will start to reduce as we resettle or we settle the business, off the back of the improved flexibility of the new EVAs. In terms of the other areas we've closed, Akanis, as I mentioned, that's now, completely done. And our procurement initiatives are working well for us, phase 1 and phase 2, as we would have mentioned before, focusing on procurement of goods in the mine, things like cargot, cardboard, packaging ingredients and the like phase 3, we'll focus more on services. And out of all the procurement activity, we're we're delivering exactly where we expected to be the main challenge in that area as we move forward will be in the area of energy and utilities.
For all the reasons that I think everyone's aware of, particularly in Australia. Turkey business continues to grow its profitability and please saying. It's still not where we would like it to be, but from a couple of years ago, it's gone from loss making to breakeven last year to delivering its targeted profit this year. And we had a very good Christmas in the Turkey business. And a series of other initiatives under, project accelerate are all delivering, where we expected them to be in supply chain and the line.
Moving to the investment program, again, Ian's touched on the capital itself. But it's very pleasing to be able to commission the expansions in South Australia, for instance, the Hatchery is now up and operating a significant portion of the Breeder network is now operating and the expansion continues. Hamly Bridge is back online, post the bush fires. And we, have continue to have major project work underway with the saps out Australian feed mill. And in New Zealand for a second hatchery and expansion, the Breber network, in addition to a large number of smaller initiatives as linked to accelerate in terms of automation or debottlenecking of plants or meeting customer requirements, as we mentioned earlier.
And we have continued to expand our capability, automation itself improves our capability modernizing and upgrading our IT infrastructure and moving from reactive to proactive maintenance capability and building our skills in key areas, as I mentioned earlier. So turning to outlook, not surprisingly given that it's not that long since the IPO process itself, but, thus far we've delivered in line with our expectations for, or consistent with the prospectus forecast and we confirm, that prospectus forecast for profitability for the balance of this financial year or for the full year. Just from a mathematical point of view, we'll start to cycle that volume growth in Australia in the second half as a result of a number of those customer EDLP initiatives over the last 6 to 12 months. Although as we mentioned with the thigh fill up launch, there may well be further such launches in the period ahead. And it'll be our job to to support our customers if they, if they choose to do that.
And as I mentioned earlier, we'll get on the volume growth in Australia. It's a good challenge to have, but it's still a challenge to digest that volume as we settle the volume rebalanced the business. We'll start to see some improved leverage from the volume we've already, got, if you like. And, as I've mentioned, we continue to extend key customer contractual coverage and the QSR customer discussion is not and it will not have any impact on this financial year to the extent that it has any impact at all, but that's an FY 'eighteen matter anyway. The New Zealand trading conditions, while we would like them to improve, we're not seeing too many signs of that at the moment.
And as was said, we'll continue to implement projects accelerate. And we expect Cash flow dividends and the like to be in line with, prospectus forecast, confirming our intention to pay 65 70% of pro form a impact. So I could summarize all that by saying a little bit of detail, but essentially unchanged outlook from the prospectus forecast. So I'm going to stop there and, we'll go to questions.
Ladies and gentlemen, we will now begin the question and Your first question comes from the line of Craig Woolford from Citigroup. Please ask your question.
Just wanted to understand because there wasn't a lot of granularity through the, perspectives around the half year split. I just want to understand what we should expect from the second half. There was commentary in the prospectus that, the first half would be 45% to 48% of the full year. So if we use anything within that range, we get an EBITDA for the full year that's above the prospectus forecast?
Yes. So, I think what we would have said with the commentary around that in the prospectus is that Although there's a little bit in Turkey, there's not a lot of seasonality in this business. It can be affected a little bit by where the the timing of the half year finishes, as Ian mentioned. So yes, we've done a little better in the first half than we would have expected at the time of perspective volume has been stronger in Australia with held up profitability in New Zealand, if you like. But But also in the second half, we continued for the reasons we've said to digest that volume increase.
We do have more short weeks as we call them in the second half. So they are public holiday weekends and the like, which with all the growth presents a challenge for us because essentially you're selling the same volume of chicken in that week, but reducing it in either fewer days or pushing into overtime and the like. So hence why we're we're a little more cautious on the second half in terms of the splits. But yes, we did a little bit better in the first half than we would have expected at the IPO.
Okay. It probably relates to this first question, but I'll tie it into a broader question about the sequencing of of project accelerate savings. There's a number of initiatives around film those slides of things you've done. As well as comments about what's coming, but just wanted to understand, are there any new initiatives being implemented or executed in the second half of 'seventeen. And given the run rate sort of effect of this, shouldn't there be a greater level of cost savings in the second half than the first half?
Yes. That was our original logic for the split that you talked about that there's not a lot of seasonality, then the the profile of Accelerate Savings should should help us in the in the second half. The so to answer your question, I guess, 2 parts there. 1 is are there new initiatives? They're not new initiatives that will deliver benefits in the second half.
Consistent with our logic for Accelerate, though, in terms of the further opportunities that we see, we are doing work on those further opportunities, but but they're a bit longer out in time. So improving our farming operation, for instance, issuing or looking at the way we operate our 3rd party feed business and so on. So there's work going on on those things, but not expected to deliver any benefits in the second half. In terms of, benefits from the initiatives consistent with what I said, we are getting benefits from automation going in now, to some extent, that well, it has helped us handle the volume, but handling that volume is still a challenge. We will start to leverage the EBA flexibility in the second half, as, as we can move to, to 10 our shifts and various other, opportunities that they give us.
Of course, we need to do that in consultation with our workforce. So we'll do that carefully over over the second half. But if you if you're putting those two points together, Yes, there's further opportunity in the second half, but we're cautious given where we are in New Zealand and just handling that volume growth in Australia.
Right. So the the some of the EBA benefit doesn't start flowing until you get the Fair Work approving?
Yes. The process is that you negotiate with the with your workforce, and their representatives, once you reach agreement, it's voted on they've all been voted up at those large plants. It then has to go to Fair Work, the ratification. That's that should be a straightforward process. It's just the of the event occurred, a week or 10 days ago.
So that's just where we are. But, yes, we we we're we're in a good place in almost four plants.
Okay. The last question was just around current trading. And given the sensitivity of the supply chain in poultry, Generally, has the New South Wales weather conditions had an impact on the broader industry? I have heard some feedback about wholesale prices rising in January?
Yes, I don't think those two things are connected, but look, I'll comment on us first of all. I'm pleased to say, you know, that we've managed our way through a very hot summer quite well. So whether it was back several months ago now, but the blackout in South Australia, we didn't lose any birds, we didn't lose anything in battery. This last weekend, we've got through in good shape. From an animal welfare point of view, we sometimes shuffle the movement of birds out of the heat of the day into overnight or early in the morning and that throws our production around, but we manage that.
But I'm pleased to say we've got through with no material impact anyway, across the country. There's a little bit of noise, yes, that there may have been some losses in in some areas of New South Wales. Possibly Queensland, but I I can't say that's factual. It's it's just what we've heard, but I wouldn't say that's linked to the wholesale price change. I think that's a a product as we would have talked in the IPO that they've been soft in the first half to do various market related reasons to takes a while to adjust this business to change settings.
So the period of oversupply can take 3 or 4 months to correct itself. And we think that's occurred, largely on the East Coast. Oh, we're seeing signs of that anyway that seem to see out last.
So you're seeing signs of it? Since January or was it in
Yes, yes. We are. Over the last 6, 4, 6 weeks, yes.
Your next question comes from
Good morning guys. First one for me, just on your comments when you talk about, in the second half volume increases, are expected to moderate. I just wanted to clarify that that's really just saying that they're going to moderate versus the very strong first half and you're not saying they're going to moderate just against what you would have originally expected for the second half?
That's correct. It's a it's just a maths thing in a comp sense that For instance, press fill ups were launched at $9 in November, you know, whatever that is now, 15 months ago, 14, 15 months ago, the $8 7.90 barbecue bird in January 12 months ago, and so on. So we're just starting to comp some of those. Some of those launches and therefore, you just get a mathematical effect that the percentage increase won't be as strong.
Okay. And then on your commentary on New Zealand and showing that chart there with the exports from New Zealand, just interested to know how you'd reconcile the apparent drop in exports from NZ to Australia with a relaxation in terms of the rules around being allowed to bring products into us from New Zealand. I mean, at face value, that's kind of at odds.
Yeah. Well, all we're doing there is putting some facts there and that information is available on the New Zealand government website. So people can draw their own conclusions, I suppose. But look, our commentary on that remains the same that is the only operator on both sides of the Tasman. We've got a pretty good handle on relative economic There's no fundamental economic case for producing in, New Zealand and exporting to Australia.
You might you might, you know, it might be a marginal economics case, but you can't really build a business on that. And the supply chain itself precludes fresh products. So you're really left with frozen. There's not really a market for frozen whole birds in Australia, which is quite a big export line out of New Zealand in the Pacific Islands and the likes. So you're through into an SB or cooked booked and frozen product.
And again, the stats speak for themselves. So we don't think it's inconsistent.
Okay. Okay. And then, Mick, just on, you're highlighting the 1 key QSR agreement still under negotiation said doesn't have an F 'seventeen impact, just to kind of get a little bit of additional color to the extent that you can provide us. I mean, is that from a timing perspective or a progress perspective tracking along the lines that you would expect or anything to going to slow than you'd expect. Just want to get some idea on that one.
Well, sometimes slow is good. It's not controlled by us, obviously. It's just ongoing discussions with our customers, which happen all the time. We're we're just calling that out because we advised in in the prospectus that it was under discussion. It remains under discussion.
The color is that obviously I have to be careful because we don't talk about specific customers. But We typically have a percentage of a customer's volume in it's true in retail and QSR. Over time, with some customers if we do a good job of new product development of growing our volume, we grow to a share of the customer's volume. For instance, might be 60% and their procurement policies might say should only be 50% something like that. And then occasionally, you know, they'll want to reset.
They'll go through their own process. So it's typically that sort of a process. So it's not unusual. And yes, our commentary at the IPO and in prospectus remains the same. There's nothing different there.
We're just saying continues to be discussed.
Okay. And then just last one for me. Just a quick one on probably a little bit less spoken about given all the company specific initiatives, but just in terms of feed conversion ratios. And I guess the impact on for the industry in terms of the ability to continue to drive a low price product relative to other protein classes is Are you still seeing those FCR trends coming through positively or is it kind of as good as it gets, just your view on that?
No, we the trend continues. In any sort of short term period, you might get some ups and downs, but the trend continues, especially strong in New Zealand. And also in Australia. The volume pressure we put through Australia means we're pushing the boundaries sometimes at some of those things, but we still see improvement in SCR. And if you look at the longer term, the genetic improvement that's flowing through, particularly now as we we have invested and reset our breeder facilities and capability, we expect to be significant.
So no change there from from our commentary in the IPO period.
Your next question comes from the line of Michael Pete from Goldman Sachs.
Bit more on that, seasonality. I'm just looking at the sixteen splits first half, second half. Is the big difference there in the second half falling quite a bit. Is that to do with what you mentioned on the rebalancing when you started the barbecue bird volume? Or what am I missing there?
You're looking at last year? I'm looking at last year.
Yes. Quite a bit of seasonality in the EBITDA first half to second half.
Okay. I think, well, if we deal with top line first, because by the time you get to EBITDA, there's probably other things going on. Generally speaking, there's not a lot of seasonality in, I'll qualify this in a minute, but there's not a lot of seasonality in chicken. There obviously is Turkey. Turkey is about maybe 4% of our volume in Australia and through the period November, December, it's probably more like 7 or 8%.
So it goes to roughly double. In that period. So Turkey will add a bit of seasonality. But the qualification is that there is a little more seasonality now coming. We're seeing around the barbecue bird.
So barbecue birds on really hot days. Demand for those bird spikes. So there's, I would say more seasonality being introduced is obviously the first we've been through with with, barbecue birds at that price point. So we're seeing more seasonality there. In terms of, EBITDA flow through, though, I'm not sure this team has been in.
Do you wanna points?
No, I think the only thing to comment, to be fair, Michael, is you know, projects accelerate the timing of fares in that we'll kind of shift it in a little bit. Obviously, we did the prospectus on the best basis we could at the time. But as these initiatives come online earlier later, etcetera, that does shift around the gross profit and EBITDA a little bit. So there is a caveat kind of put on the on that.
Yes, I'd imagine that obviously on Craig's point, it actually builds as you go forward, but I don't know what I'm missing, but I I think looking at the is this the first time we've got the first half split this last year? I've got 87.3 I've got the second half implied there is 80.2. So there's a big drop in the second half, and I'm just wondering is that did it cost you on the rebalance that you mentioned when you first started off?
Yes. So if we look at, there's probably a number of factors in there that get through to EBIT Dar is my only comment. But if we deal with that, yes, from the launch of the barbecue bird, of course, it took us 2 or 3 months to be able to come into full for the obvious reason, which you have to set the eggs and start from there, which takes time. Secondly, it's skewed, because of a dramatic change in demand profile. It skewed the field.
So more small birds feel big birds. It skewed your operations and so on. And therefore, it took a while for that to rebalance and convert to profitability. And that's, you know, as an element of that in what we're saying now that that, the volume growth in Australia is great. It'll take a little while to settle that volume and convert it into or to get the operating leverage from it, if you like.
Okay. Just, I think you've pulled it out on a pro form a basis, but the provisions obviously went on down. Is that, Is that just the provision provision for closure of that, or can you just give us a bit more clarity on how
Yes, sure. So the bulk of it is chaotic, obviously, is that closed damage in the first quarter. But you've also got, as part of the transformation, there were a number of kind of exits of personnel that were obviously provided at the year end and kind of occurred through Q1 as well.
Consistent with what we said in the IPO, which most of that was behind us by the IPO as the insight occurred in Q1.
Great. And, just, on feedstock costs and what are you seeing there and how far forward are you locking in?
Yes. So a reminder that if we're not the biggest seed buyer in the country, we'd be close to it. But So we buy forward usually around 9 months. If anything at the moment, we're pushing we're pushing a bit longer because we're coming off relatively low base. And we don't expect that.
That will be the case further for obvious reasons here in Australia with a very good season and a lot of, grain around. But also remembering that because we cover them, we're not we're not subject to the short sorry, we we buy for, we're not subject to the short term sort of spot price fluctuations. So we kind of trade through that for one of the for one of the better term, but, and also that while grain prices are down here, soy prices the second being ingredient is internationally priced and over the same sort of period that they turn the up not down. But generally speaking, yeah, we would say feed prices are unlikely to drop further. And essentially, we're extending coverage where we essentially can.
Your next question comes from the line of Jordan Rogers from UBS. Please ask your question.
Most of my questions have been asked. I just wanted to know, you got great color on what you're doing on project accelerate, just to quantify that around how you're tracking, you're targeting to get around half of the 160 to 200 this financial year where the run rate is, either at the half, just gone or or as of today?
Yes. So we're very much in line with that expectation that you mentioned. While we grapple, of course, with all the everyday challenges in this business, which is why we mentioned the expanded volume more over time, and so on. So we're getting the benefits, we we, you know, we wouldn't have been able to handle the volume increase without some of the automation and so on. We also need to settle that at extra volume, rebalance our business and get some of that volume processed and not on over time.
If you like. That's probably the only comment I would make, but, we're tracking where we expect to be.
80,000,000 at the end of this financial year? Yes. Yes. Okay. And then just another one, just around quantifying a bit more.
You just talked around the fee costs not changing materially. Can you, from here, can you just give any indication around what the percentage change was for feed cost in the half just gone on PCP or in dollar 1,000,000?
No, I can't. I mean, a good proxy our feed price is, ASX wheat and sea bot soy. I mean, if you have a look at that, you'll get a good feel, but remembering that we're buying forward and that a large percentage of our volume is covered by feed price pass through. Mechanism. So hence the, while you can get an external read on the inputs, how that translates to the bottom line.
Probably the only other indicator you'll get is that our volumes are a certain amount and and revenues, up by less than that, so which indicates the the pass through or is it proxy for the pass through element. So So no, it's hard to put a number on it specifically.
Your next question comes from the line of Adam Simpson from Macquarie.
Most of the questions answered, just on the external feed business, I think you commented that your customer was rolling off contractual arrangement. Would that be material in the second half? Will we notice that? And I guess any comments on how you're seeing outlook for the rest of that business? Yes.
So the from a volume point of view, you'll probably notice it, but it's not material from a from an earnings point of view. The outlook for that business, while in New Zealand, where a fair component of the business is dairy, that's that's firmed up a bit. Again, you can use the sort of dairy price as a as a proxy for that to some extent, but also weather conditions in New Zealand. So the outlook there would be better than the first half. And over here, it's pretty it's pretty steady because chicken and and pork feed volumes are pretty steady.
And similarly have, that's a price adjustment mechanisms linked to linked to input costs. And and we don't do, we don't do dairy over here in horse horse see it is a packaged product business and very steady in terms of volume and margin. So volatility probably comes out of New Zealand and the dairy component.
There are no further questions at this time. I would now like to hand the conference back to today's presenters. Please continue.
All right. Thank you very much. Thanks for your time and look forward to catching up somewhere. Thank you.