Photo by: Duane Daws
Diversified feeds and poultry company Quantum Foods lifted its headline earnings a share for the six months to March 31, by 182% to 26.3c, compared with headline earnings a share of 9.3c in the six months to March 2014.
Quantum further reported profit a share of 26.7c for the six months under review, a 566% improvement on the 5.7c loss a share reported the year before.
However, group revenue decreased by 3.7% to R1.7-billion, while revenue from the South African operations decreased by 5% to R1.6-billion, largely owing to a decrease in revenue from the broiler business following the business model change at the company’s Western Cape operations.
“Trading conditions in South Africa for companies in the poultry sector improved in the period, as maize and soya meal costs were lower, owing to an improved international stock position benefiting egg and broiler production costs,” the group said in a statement.
Quantum’s Nova Feeds, in Pretoria, continued to supply large-scale dairy farmers in the Western Cape and some of the largest independent poultry producers in South Africa.
Further, its Nulaid eggs and layer livestock division’s performance improved significantly on that achieved in the first half of the prior financial year, with the operating margin improving to 5%. Egg sales volumes were similar to 2014, with average selling prices improving by 4%.
Egg prices also improved owing to balanced supply and demand in the market and broiler prices increased despite a continual increase in bone-in portion imports.
“The outlook for the South African economy remains challenging. Low economic growth, instability in electricity supply and higher inflation prevail in an environment that has a continual negative impact on consumer spending,” Quantum said.
AFRICA OPERATIONS
Although revenue from Quantum’s Africa operations increased by 26.7% to R94.4-million, owing to the inclusion of revenue from the its Zambia distribution centre, profitability decreased as the local currencies in Zambia and Uganda weakened against the rand.
In Zambia, egg sales volumes were affected by lower production and, in Uganda, farm efficiencies declined owing to disease challenges.
However, the group’s R36-million farming capacity expansion project in Zambia was well under way and was expected to be completed in the second half of the year. Progress was also made with the R38-million Uganda egg layer farm project and capital expenditure was expected to start in the second half of the year.
Cash generated by operations amounted to R111.5-million.
This included an increased investment in working capital of R7.3-million. Capital expenditure in the period under review was R22.3-million.