I would now like to hand the conference over to Mr. Quinton Hildebrand, Managing Director and CEO. Please go ahead.
Thank you, Drew, and good morning to you all. Thanks for your attendance today. I know it's a busy reporting day. Richard and I are very pleased to provide to you our results for the first half of the 2025 financial year, and we'll also update you on the progress that we've made in the half in growing the business. We'll be talking to the slides that were loaded up on the ASX website this morning. Starting at page two, the financial summary, the business recorded an EBITDA of AUD 50.6 million, a year-on-year increase of 9.3%, and this includes the first full six months of the OMP contribution, which exceeded our expectations. I'll speak to the performance of each segment in the next few slides.
Our statutory net profit was AUD 22.2 million, a 3.5% increase on the prior comparative period, after accommodating the higher amortization of customer relationships, depreciation, and financing costs related to the acquisition of both OMP and the Carrick feed m ill. Our focus on disciplined capital management has continued with a strong operating cash result of AUD 49.2 million and a cash conversion of 96%. On the back of this performance, the strength of our balance sheet and the outlook for the business, the Board determined a dividend of AUD 0.0475 per share, fully franked, which is towards the top end of our payout ratio. Moving to slide three, the Bulk Stock feeds segment delivered an EBITDA of AUD 21.7 million, down AUD 1.3 million on the prior comparative period.
The result was impacted by the lack of supplementary feeding in the beef and sheep sectors when compared to the first quarter of the previous year. We also saw some effects of the Victorian avian influenza outbreak on our mills, which lasted longer than expected. Partially offsetting these was the underlying volume growth in the ruminant business, primarily in dairy and in monogastric, where the genetics issues that were affecting the broiler industry have been resolved. The new Carrick feed m ill broke even in the four months in which we owned it. However, we expect to see the benefits in the second half. Moving to slide four, the Packaged Feeds and Ingredients segment.
This segment delivered an EBITDA of AUD 35.7 million, up AUD 4.2 million on the prior comparative period, largely driven by the OMP contribution, including the cost efficiencies through the integration process, as well as the volume growth in Ingredient Recovery and packaged dog sales. This was partially offset by the foreshadowed lower sales prices for tallow and meals and the lower aqua nutrition volumes eroding Narangba operational efficiencies. Next, I wish to update you on the business reset that has commenced within the business to support our upcoming three-year growth plan. Before I outline the reset, I just want to summarize what we've achieved as a business over the last three years. We've improved our asset utilization and reduced our unit costs, sharing the benefits with our customers, and in so doing, we've increased our market share.
We've delivered year-on-year earnings growth, successfully integrated acquisitions, exercised balance sheet discipline, and importantly, built our people capability, and through this process, we've delivered a total shareholder return CAGR of 22%. Over the last six months, the Board and leadership team have been developing the FY 2026 to FY 2028 growth plan, which will be presented to investors in the fourth quarter. This will continue to focus on cost-efficient organic growth and value-accretive acquisitions in five main areas. Firstly, continuing to grow our market share in Bulk Stock feeds. Secondly, further developing our Ingredient Recovery offering, particularly to pet food producers. Thirdly, expanding our contribution to the Packaged Products sector. Fourth, creating value from the commercialization of NovaqPro. And lastly, leveraging our existing strengths to extend our services in the agricultural sector.
To support this growth plan, we've commenced a restructuring of the organization to further streamline the business, exit lower returning operations, better resource our strategic priorities, and strengthen organizational capability, and through this reset, we will be delivering annualized cost savings of AUD 5 million EBITDA for FY 2026 onwards. The cost of this reset, which will largely be implemented in FY 2025, is AUD 3.5 million, which would be an individually significant item. I'll now hand over to Richard, who will take you through the financial results in more detail.
Good morning, everyone, and thank you, Quinton. I'll now present the detailed financial results, beginning with the operating profit and loss summary on slide seven. As Quinton has already taken you through, the operating segments delivered a combined EBITDA for the half year of AUD 57.4 million, representing an improvement on the previous corresponding period of AUD 2.9 million or 5.4%. The corporate costs increased by AUD 0.3 million to AUD 6.8 million, with the increase largely relating to wage costs associated with inflation. Otherwise, corporate costs remain well controlled. Although the net individual significant gain was only AUD 13,000, this item did include costs relating to the acquisitions of OMP and Carrick of approximately AUD 200,000, which were offset by a land management gain of a similar amount.
Depreciation and amortization for the period was AUD 15.1 million, a AUD 2.6 million increase on the PCP. This mainly related to the depreciation and new amortization of customer contracts charge, the new amortization of customer contracts charge from the acquired OMP business, which totaled AUD 1.2 million, and the depreciation related to a number of large capital projects that now have been commissioned in the last 12 months. These include the packing line at Narangba and the Pakenham debottlenecking project. As forecast previously, finance costs increased from AUD 3.5 million to AUD 4.9 million, which reflects both the higher interest rate environment and the increase in debt relating to the acquisitions of both OMP and Carrick. The income tax expense decreased by AUD 300,000 as a result of the benefit received from the tax treatment of various employee share schemes.
The underlying effective tax rate was 28.9% in line with prior periods. The net impact of the above was an increase in net profit after tax of AUD 800,000 or 3.5%. Now turning to slide eight and the balance sheet. Shown here is an overview of the balance sheet, which shows an increase in net assets of AUD 6 million since June 2024. This increase includes the net assets from the acquisition of Carrick, which was fully funded through borrowings. The major changes related to the acquisition included inventory of AUD 1.6 million, property, plant and equipment of AUD 1.5 million, and goodwill associated with the acquisition of AUD 5.1 million. Also included in the net asset increase is plant and equipment associated with the debottlenecking projects at Clifton and Pakenham and the capital for the new OMP facility at Timaru in New Zealand.
Turning now to slide nine and the group working capital, which has decreased by AUD 22.7 million versus the same period last year. This movement is broken down into the following: an increase in the use of supplier financing of AUD 19.3 million, which was implemented in half two FY 2024, a net increase associated with the acquisitions of OMP and Carrick, which totaled AUD 17.6 million. In relation to underlying working capital, there was an AUD 18 million improvement in receivables due to an increased focus on collection management, and inventory reduced by AUD 7.5 million as the business reduced its hold of strategic grains inventory at balance date on the back of a more stable commodity pricing environment following a delay in the harvest. The business has since built its strategic grain position to provide the potential for greater opportunities in the second half.
Turning now to slide 10 and the group cash flow. Net debt increased by AUD 18.3 million to AUD 69.1 million, which represents a leverage ratio of 0.72 x, well below our target range as set out in the capital allocation model of one to two times and our covenant requirements of 3.25 x. The increase in net debt relates to the additional funding in period required for the acquisitions of OMP, which totaled AUD 6.2 million, and Carrick of AUD 8.1 million. Excluding these, the underlying net debt increased by AUD 3.9 million, which related in part to higher dividend payments and the additional interest payments. Capital expenditure during the period was AUD 19 million. We continued to prioritize reinvestment in our asset base, with AUD 7.4 million relating to sustenance capital.
The growth capital in the period of AUD 10.6 million included the projects that I spoke of earlier, including the debottlenecking at Clifton and the new facility at Timaru in New Zealand. Net financing costs increased by AUD 1.6 million to AUD 4.8 million on the back of the rising interest rate environment and the slightly elevated debt levels following the acquisition spend. Tax payments were higher than the PCP. This was a product of both the increase in net profit after tax and some timing changes. The strong cash position and the increase in earnings have supported the announcement of an increase in the interim dividend to AUD 0.0475 per share, which represents an 8% increase on the PCP. During the half, AUD 14.6 million was paid to shareholders by way of a fully franked dividend. Moving now to slide 11 and the capital management net debt slide.
Our net debt was AUD 69.1 million at 31 December. After deducting the outlay for the acquisitions of OMP and Carrick in the last 12 months, the underlying debt is only AUD 1.8 million. The net debt position and associated balance sheet has provided the business with the opportunity to not only increase the dividend but still provide the opportunity to support future growth and/or capital management initiatives. At the half, the gearing ratio was 25%, and as I mentioned previously, the leverage ratio is 0.72 x, well below our covenant requirements. Turning now to slide 12 and the capital allocation model. This was first implemented in FY 2021 and has become integral in the prioritizing of capital by aligning investment decisions to shareholder returns via our communicated metrics. During the period, the business delivered strongly against the model.
This included prioritizing of maintenance capital and a reduction in the underlying working capital. Continuing to operate below our targeted leverage range has also provided the ability to support the increase in the dividend, which represents 68% of our net profit after tax, which is at the higher end of our communicated range. It also supported the funding of the acquisition of the Carrick feed mill. Pulling this all together, the business has delivered a shareholder return for the last six months of 29%, well above our annual target of 15% per annum. Finally, shown on slide 13 is an update to our sustainability scorecard. We continue to make good progress, as you can see as outlined here today. We have also met our FY 2025 commitments and are well placed to meet our 2030 commitments.
It is also particularly pleasing that we are currently ahead of our energy reduction targets, both in the short and the longer term. That concludes the financial component of the presentation. I will now hand back to Quinton, who will take you through the remaining slides.
Thanks, Richard. Moving to slide 15, just an update on the growth plan, and you can see there the familiar slide, which is just capturing our key initiatives within the three-year growth plan, and you can see the traffic lights on the right-hand side showing that the majority of the initiatives are well in hand. If we move to the next slide, this outlines our strategy on the left of the virtuous cycle, and by way of update, the flywheel gains momentum and we gain economies of scale as we share our benefits with the customers, and this value proposition helps us to continue win business. As this is providing us high asset utilization, we're also getting a lower cost base, and that's improving the moat around our business.
Ridley Direct, which we launched within this growth plan two and a half years ago, has grown to account for 10% of our total volumes, and this is providing access to new customers that we otherwise wouldn't have had contact with. The debottlenecking of the Clifton feed mill was completed during this half, and only in January did we shift from a 24/7 to a 24/5 operation, which should lower this cost structure of that mill. And then we just got another slide on the next page, updating the progress on the Carrick feed mill, which we bought at the end of August. So we've had four months' ownership of the Carrick feed mill, and as planned, we have moved to a second shift and have shifted volumes from the Gippsland area.
The volumes that were produced at Pakenham in Gippsland and supplying Tasmania have been moved to the Carrick feed mill during this period, and we've also been winning new customers in Tasmania with the benefit of us being the local supplier. So as a result of this, the second shift will be filled in Carrick imminently, and that will start giving us returns in the second half. If we move to the next page, which is the Packaged Feeds and Ingredients, Ingredient Recovery, the Ingredient Recovery business unit has been digesting the increased volumes at both the Maroota facility following the closure of AJ Bush and the Laverton facility. Both these facilities are undergoing debottlenecking projects, which will improve our efficiency and yields, and that'll help us as we take the benefit of these increased volumes.
We've also added capability in the team to better service the pet food sector, and that's a key focus area for us. OMP has delivered above our acquisition hurdles as we've been able to build on the customer relationships and drive efficiency gains in the integration to Ridley. This has been underpinned by the team's successful contracting for calendar year 2025. Then on slide 19, we're pleased to advise of the progress of the Timaru construction, and there's an early photograph that you can see there. The project should be complete well in advance of the October 2025 period when the existing lease facility will expire. And in anticipation of this, we've started to develop some new markets so that we have homes for the increased capacity that we'll be producing in Timaru. Moving to slide 20, our Packaged Products business unit.
With the growth in demand for third-party packaged pet food opportunities, we've had to return the Narangba facility back to a 24/7 operation. So it was this time last year that we moved it back. We moved it down to a 24/5 operation, but with the good progress in dog food demand, we've been operating on a 24/6 cycle and are recruiting to go back to 24/7. This demand for pet food and profitable pet food growth has taken us to the decision to accelerate our withdrawal of feed to the domestic aquafeed market. This will give us additional capacity at Narangba for pet food, which is more profitable than the aquafeed sales that we've been undertaking. So hence, we've accelerated our exit, which will take place mostly during FY 2025. There'd be a remaining contract which will continue into FY 2026 to fulfill our obligations.
And while we're doing that, we've streamlined our aqua expertise to focus on the commercialization of NovaqPro in the global prawn market, and we're pleased to say that we've had our first registration of the NovaqPro boosters into Thailand, and we expect registration in India, Indonesia, and Ecuador in calendar 2025. So we are streamlining our aqua resources and narrowing the focus onto the commercialization of NovaqPro. That brings us to the outlook statement, and on page 22, Ridley's business portfolio, with its diversified spread of operations and markets, continues to provide resilience in managing inflationary pressures, biosecurity events, and changes in commodity cycles. In FY 2025, Ridley expects earnings growth from the contributions from OMP, increased volumes in Bulk Stock feeds and Packaged Products, operating benefits from Clifton and Carrick expansions, and efficiency savings from the restructure of the Ingredients operations.
The business reset to support the next phase of our growth plan is expected to deliver AUD 5 million per annum in cost savings for FY 2026 onwards, and this implementation is expected to be largely complete by the end of FY 2025, with approximately AUD 3.5 million in one-off restructuring costs. Thank you for staying on to the end of the presentation. I'll now hand back to Drew, the moderator, to take your questions. Thanks.
Thank you. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up the handset to ask your question. The first question comes from James Ferrier with Wilsons Advisory. Please go ahead.
Good morning, Quinton and Richard. Thanks for your time today. Please know we're going to be speaking to you for a bit longer too, Quinton. That's great to see. Can I first of all ask you about the Bulk segment? I'm just interested if you can compare, broadly speaking, the outcome on procurement margins in first half 2025 compared to the outcome in first half 2024 and first half 2023, because there was quite a bit of movement in the outcomes across each of those three periods, and I guess we're just trying to get a bit of a feel for whether first half 2025 you would describe as a normal outcome or a slightly below normal outcome.
Great. Thanks, James. And I think it is useful to look at it over sort of three years, and it's always during the first half that we've straddled the harvest. So there are factors at play there. So if we look at the Bulk Stock feeds performance in FY 2023 first half, our EBITDA was AUD 17.9 million. In FY 2024, we grew by AUD 5 million to AUD 23 million. So that was 29%. And then this half, we're at AUD 21.7. So factors within that. FY 2024, we had the benefit in the first quarter of what we called out as AUD 2 million worth of drought feeding. So that has been the main contributor to why FY 2024 was a stronger year. However, as you allude to the different seasonal effects in the harvest, FY 2023, we had those wet conditions. FY 2024, and that interrupted the harvest.
2024 was conditions that gave us sufficient opportunity to be able to acquire grains during the harvest and take advantage of our mills and storage capacity and get in on the arbitrage on grain values at that time. This current season we've just had was actually surprisingly benign, and while we've had a good crop in most of the regions where we're drawing from in the south, the actual pricing has been very consistent, and so the ability to trade within volatility has been constrained to some degree. Happy with the performance of the merchandising team, but there just wasn't that ability to take as much advantage through market volatility and pricing volatility.
Thanks, Quinton. That's helpful. To stay on the Bulk segment then and thinking about the volume growth. So monogastric at a market level being soft for a little while now, and Ridley achieved 2.2% volume growth in this first half 2025 period. So I'm just curious on your view around how that compares to the market. Is Ridley still growing market share? And the second part of that question is, do you think there's still more cyclical upside in the rate of market growth to catch up for what has been a sort of a multi-year production deficit?
I would say that the industry is tending back to that 3% per year expectation. There's probably a little bit of a shift between different producers within that industry 3%. And us producing, having a 2.2% in this period was sort of representative of those to whom we've supplied in this period. So I think we would expect to tend toward the 3% that the industry is tracking at in the next year as we stand today.
Thanks, Quin. Last question is around the aqua packaged part of the business. So the second half of FY 2024 was impacted around the aqua reset. You talked today about some pretty impressive volume growth coming on in the pet food business and moving back to 24/7 already, and subsequently a decision to accelerate the full withdrawal from aqua. So just so we can get some perspective on what financially the overall impact of that was like within the first half 2025 result, probably compared to PCP, because that was probably a pretty clean period. What was the sort of earnings deficit or increment in first half 2025 from all of that activity?
Yeah. So it's been a bit of a pivot. We pulled back to 24/5 , and I would have expected us to get some benefits in the first half FY 2025 as we pulled back and lowered our operating costs and sort of matched the capacity with the dog and aqua volumes. As the year has gone, dog volumes have increased fairly substantially, as we call out a 7% increase in dog sales. The aqua sales volume was lower, and that reflected a bit in the industry too, so that was disappointing. But net net, we've had to increase our production to a 24/6 , which came at an increased cost.
So while I might have expected to make more money out of the Narangba operation in this half, because we're responding to the growth signals we're getting and the conversations we're having with packaged pet food customers, third-party customers, where we have been running a more expensive 24/6 operation and we're migrating to 24/7 , so we didn't get any benefit. So it's pretty flat in this half.
That's very helpful, but just to be crystal clear, flat versus second half 2024 or flat versus first half 2024?
First versus flat. First half 2024, James.
Yeah. That's what I suspected. Thanks very much for your time.
Thank you.
The next question comes from Apoorv Sehgal with UBS. Please go ahead.
Hey, good morning, Quinton and Richard. First question from me. Yeah, just a bit of a follow-up, I guess, from James's question earlier on the Stock feeds business. Clearly, a few kind of suboptimal factors impacted that first half result. I guess into the second half, how are you thinking about sort of second half, particularly if you don't have some of those same headwinds kind of happening in this current second half period? Can we expect the second half Stock feeds EBITDA to be higher than what you've delivered in the first half?
I think yes, marginally. And the volumes we're seeing in ruminant, particularly, are positive, and our dairy sales are strong, as well as we fill that second shift at Carrick and are rebalancing the packing and ruminant volumes, we think that we'll get an uplift there. Perhaps that's AUD 1 million or so. But yes, we expect the Bulk Stock feeds segment to be marginally firmer in the second half.
Okay. That's clear. Thank you. And this is on OMP. Apologies if I just didn't see the number. Did you or can you disclose the EBITDA contribution of OMP in this first half result and also your expectations for the full year?
Yes. AP, we have opted not to disclose the half's performance just due to the competitive environment and the commercially sensitive nature of that. But what I would say is we did disclose the first three months trading at the full year in August. And you'll recall that OMP made AUD 3.2 million in the first three months. And we were cautioning at that point that that didn't mean that three months could be doubled to give you the first half result. Well, I'm pleased to say that we did exceed that. So the business and the integration of the business and the efficiencies we're driving have given us returns from that business to date that are exceeding the acquisition expectations. And we're pleased with the contracting that we've achieved for calendar 2025.
So we've locked that in again and at levels that, again, are higher than what our original acquisition thesis was, so firm results, and we're very pleased with that acquisition to date.
Thanks, Quinton. Quick follow-up maybe for Richard. This is a bit of a specific question. Customer amortization of the OMP acquisition probably hasn't been stripped out of EBITDA. I'm just wondering, is there a customer amortization dollar number that's actually in that EBITDA number that you have put in the normalized result?
Yeah. So that's obviously something that will continue through. So that is normalized activity, but that's approximately AUD 800,000 a year will be the amortization of those customer contracts over a 10-year period, right?
Okay. And that's in that AUD 15 million of EBITDA that you reported is part of that in the normalized result?
That's right.
I'll ask one more question before I'll jump back in queue after this one. Just on Carrick, so a tiny loss, the AUD 61,000 loss in the first half, break-even EBITDA full year. Can you talk about the contribution you'd probably expect as that ramps up into FY 2026?
Yeah. I think in FY 2026, we will be operating at a minimum on the second shift. So we would still. We're expecting that we would be able to take that on an annualized basis, probably to an AUD 2 million EBITDA increment. So if you assume that within the growth that I mentioned for Bulk Stockfeeds just a minute ago where we said AUD 1 million and Carrick's a contributor within that in the second half, I think you're probably somewhere between 1.5 and 2 as a year-on-year improvement from Carrick.
Brilliant. Okay. Thanks, Quinton. Richard, I'll talk soon.
Yeah. Thanks.
Your next question comes from Paul Jensz with PAC Partners. Please go ahead.
Thank you. Three quick questions if I can, Quin, and Richard, just on the competitive environment in your markets, and we might focus on, I suppose, poultry and pets. I can see, as per James's question, you're growing in line with your larger customers and larger peers, so is there sort of some changes there in poultry where the large guys are growing a bit faster than the small guys?
I think there's a little bit of regionality as well within even the big players. So it's just where we're located and where some of their growth is happening. So from a Ridley point of view, we currently have roughly the same tonnage sold to five large broiler operators. So we've got a diversified portfolio. Some of the expansions that have happened have happened in one of the producers in New South Wales, and we don't participate there. So to some degree, there's some of the 3% industry growth that we're not participating in in that area. But other than that, we are split across the other five. So in time, it should normalize there.
With those five, are you finding, I suppose, increased competition around margin with feed costs coming down and, I suppose, the growth going up? Is there a sort of a push in there, or is it reasonably rational?
Yeah. We've got long-term agreements in place, and a lot of our pricing structures with these large poultry producers, broiler producers, are based on a milling margin, and then we facilitate the raws purchases that they make their decisions on, and so it's really a pass-through on that aspect, so to some degree, we're sheltered from the week-to-week, month-to-month market competitiveness that those broiler producers have against each other. We're just producing based on their long-term demand profiles, so no, we don't feel the day-to-day competitive elements that they obviously endure.
Then the other competitive areas with pets with 7% growth in dog and, I suppose, your brand behind the brands there, is there some tapering there in the pet food space, or do you think competition is still in that growth phase, therefore they need supply?
Yeah. We've been constrained for some time now in being able to participate in pet food because Narangba was at capacity producing aquafeed as well. So we've been sort of restricted. We're now more active. And I think as a partner and following the packaging plant that we put in at Narangba, which is only 12 months done now, as a result of all of that, we're a bit more of a sophisticated partner for some of the house brands that are being produced by the grocery sector and the pet specialty market. So as tenders cycle, we're a good partner, and we're able to move into that sector, bringing to the fore our procurement benefits. And as you know, in dog food, probably 40% of the ingredients are meat proteins, and we produce those. So we're an integrated producer through ingredients, pellet extrusion, and the packing capability.
So yeah, we are taking market share from others, so we're growing significantly faster than the market. There is, on a macro level, the cost of living crisis is driving strong sales in some of the generic brands, and there's some buy-down as we understand it. So yes, we're probably getting a little bit of a tailwind there, but that's nowhere near the 7% growth level that we've been benefiting, which is us winning new business and taking market share.
And just expanding that in the last little wrinkle there, you've got another five million or so of cost savings for the next, I suppose, three-year cycle. And the partnerships and the competitive environment you mentioned, are you able to sort of give us some sort of guideline as to the next three years and what are going to be, I suppose, the platforms you're going to expand?
We will be presenting that in a dedicated presentation on the next three-year growth plan. But we've deliberately, on slide five, I think it is, on the right-hand side, given you those five areas of where we're looking to focus. And so within the business, and we're halfway through this reset, we're adding some resources in key targeted areas and generally across the whole business. We're streamlining and will be being very selective as to how we resource and getting more efficient. Yeah, those five would be the key areas.
Thank you, Quin. And Richard, thank you. Excellent result.
Thanks, Paul.
Once again, if you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. Your next question is a follow-up from James Ferrier with Wilsons Advisory. Please go ahead.
Thanks for your time, again, James. A quick one firstly on that annualized cost savings target. Is your expectation that you would fully achieve that in FY 2026, or is it a partial contribution in FY 2026?
I think a full achievement in FY 2026. We're halfway through the implementation now, and we will largely have completed it by the 30th of June.
Yeah. And so probably negligible contribution, putting aside the actual cost to implement it, but a negligible contribution from the five million of savings in FY 2025?
Yes. I think it's negligible.
Yeah. Excellent. And then on the Ingredient Recovery business, first of all, can you just quantify what the impact was from lower sales prices in the first half result?
Yeah. I mean, in terms of that, James, we approximately AUD 4 million, which is basically the AUD 3 million associated with the tallow that we'd previously called out. We did also see the meal prices were down to the extent of probably about AUD 1 million as well. That was a combination of some additional supply being available as a result of the avian influenza and some volumes not being able to be moved to overseas, particularly during that period. But we also saw, obviously, the protein meal because there was some good soy and good canola crops this year, which meant that the size of the crop meant that the pricing of those was quite competitive in this period. So really about AUD 4 million, three tallow, and then the one associated with meal pricing.
Yeah. Okay. That's good to know, and on the sort of, I guess, putting that pricing, the selling price equation aside, pleasing to see the volume growth that was achieved in the period for Ingredient Recovery and then some new contract, new customer volumes coming through up in Sydney. When you talk about the debottlenecking projects that are on track for completion in the second half, just what sort of quantum of investment and what sort of quantum of earnings benefit do you anticipate from those?
At this point in Maroota, we're operating at full capacity, and we're actually having to transport some of the volumes outside of the Sydney basin for rendering. We're still working through different stages. There's different projects to adjust for this increased volume and take us to an efficiency benefit. We're looking at double-digit CapEx, so more than AUD 10 million worth of CapEx at Maroota to get us back to an optimal level to accommodate this increased volume. The payback on that capital would be sort of a three- to four-year kind of payback. It's quite a substantial change. Now, we've already got some of the benefits here. It's really the yield and optimization and a little bit of the volume increment that would save us having to move material out of the region.
Yeah. That makes sense, and is the Laverton debottlenecking probably a more or less material, less significant activity?
Yes. Less than AUD 2 million, and probably on that one, a slightly better payback, two to three years.
Excellent. Thanks for your time.
All right. Thank you.
Your next question is a follow-up, which comes from Apoorv Sehgal and UBS. Please go ahead.
Hey, guys. Thanks for taking the follow-ups. Just as a follow-up to the tallow and meal price, thanks for quantifying the headwind there, Richard, AUD 4 million in the first half. Just interested in your thoughts on how to think about that into the second half. In particular, it's a bit of a more broad-based question as well. With the Trump administration, what sort of implications do you think that might have on biofuel demand and how that sort of flows through for your ingredients recovery business?
We've seen a small increase in the tallow price in the last few months. I mean, we're trading probably AUD 1,300-AUD 1,350 tallow prices at the moment. And that's probably AUD 100 up on where we were, albeit we're still 10% down on this time last year. The signals out of the U.S. are quite difficult to read, but by and large, we are seeing an improvement. And that was because the used cooking oil imports that were coming through from Asia into the U.S. were taking a fair volume. And as a result of that, impacting some of the other substrates, both soy oil produced in the U.S. and then tallow in the U.S. and imported. So as a result of that ban, which was implemented recently, there's been a bit of a bump up in the price.
And if you read through some of the indicators and you look at Darling's numbers and things, they've all firmed slightly. So one would hope that those are positive signs for a resumption in the renewable diesel consumption and therefore pulling on the tallow pipeline again. I think there's a bit of overhang of soy oil production to be consumed first, and then we might get a lagged benefit. So that's our read of it at this point.
Yeah. Interesting. Thank you for that, Quinton. With the AJ Bush volume opportunity as well that you have through your Maroota and Laverton mills or rendering facilities, are you still expecting a roughly AUD 2 million tailwind in FY 2025 from memory is what you called out last time? Is that kind of how you're still thinking about it? And would you be able to say if you got some sort of benefit initially in the first half, or is there more of a second half waiting there?
No, no. We're still calling out the AUD 2 million AP, and it's roughly 50/50 in terms of the benefit. So we definitely got a benefit in the first half from those incremental volumes. As Quinton said, the next phase now is how we improve those yields. But that AUD 2 million on where we're at today, we have seen, and we'll get the benefits of that in the second half as well.
Okay. And then just one more on the OMP business, I know you don't want to talk specific numbers, but should we be thinking about first half, second half seasonality for the OMP contribution at all?
I think we can expect it to be pretty similar. The calendar year 2025 contracting is at pretty similar levels to what we achieved in the first half just gone.
Yeah. So if we put, I mean, some of these different factors together for the overall packaged ingredients segment, I mean, tallow price marginally ticking up, which is good into the second half, AJ Bush opportunity, fifty-fifty first half, second half sort of contribution, OMP kind of similar both halves. I mean, is there any reason to expect much seasonality overall then for the ingredients segment first half, second half, taking into account all those different things?
I don't think there'll be too much in the way of seasonality. No. I think all those factors should come to result in a reasonably similar result in the second half with maybe a slight increase on the back of just general accommodation of those factors. But we're certainly calling out small growth in the second half. But yeah. So I think your estimation's pretty right, AP.
Okay. And just so one last one. Corporate costs, presumably pretty similar result, second half first and the first half?
Yeah.
Yeah. Cool. Okay. Thank you.
Thank you, AP.
There are no further questions at this time. I'll now hand back Mr. Hildebrand for closing remarks.
Thanks very much. Appreciate your time and questions on the call today, and we look forward to seeing those who we meet with in the roadshow in a couple of weeks' time. Have a good day. Thanks very much.
Thanks, all.
That does conclude our conference call for today. Thank you for participating. You may now disconnect.