JSE-listed Quantum Foods’ South Africa-based feeds business performed satisfactorily in the four months to January 31, with stable rand-per-tonne margins and profitability compared with the previous year.
In a trading update on Monday, the company reported that the favourable feed raw material cost position of the business had continued during the first four months of the 2018 financial year.
“External feed sales volumes grew by 11.7%, compensating for the decline in the feed requirement from the farming operations of the group,” the company said.
The decline in feed in the layer farming operations was the result of lower hen numbers owing to avian influenza, and in the broiler farming operations by the lower feed consumption achieved per bird reared.
The farming business also performed in line with expectations, despite the additional loss of 242 000 birds following the further outbreak of avian influenza on a layer rearing farm in the Western Cape and fewer eggs being produced.
The egg business experienced significant tailwinds during the period.
Compared with the first four months of 2017, average selling prices per dozen eggs increased by 32%.
Egg production costs also decreased owing to the decline in feed costs.
Egg sales volumes declined by only 5.6%, but the profit effect of the improved margins is expected to be substantial for the first half of the financial year.
Meanwhile, production costs decreased in all three other African businesses following the decline in feed raw material costs.
“This, together with stronger demand from the market for day-old chicks and eggs, is expected to result in improved margins and profitability for the first half of the financial year.”
The outlook for the remainder of the financial year to September 30, is also expected to reflect an improved performance compared with the previous year.
Quantum expects stable performance in the feed and farming businesses, higher profitability in the egg business and improved trading conditions in other African countries during the current financial year.
“This outlook could, however, be materially impacted on by any further impact of avian influenza, especially in any of the [group’s] large facilities that house a significant number of birds,” the company warned.