Falling egg prices and rising raw material costs hit Quantum Foods
The poultry and animal feeds business expects the negative trend to persist for the remainder of the financial year
Quantum Foods, the Western Cape-based poultry and animal feeds business, has bemoaned rising feed raw material costs and declining egg prices, which have put pressure on its operations.
In the six months to end-March, SA’s largest egg producer said the input costs, especially maize and the egg selling prices heightened volatility in its business.
The price of yellow maize increased by 29.5% because of dry conditions in the maize-producing areas of the North West and western Free State, the producer of the Nulaid eggs said.
“Egg prices declined by 14.1% and volumes increased by 2.9%. With egg prices declining and input costs increasing, the pressure on margins increased,” the company said.
Quantum said load-shedding had an adverse effect on its feed business as more than 2,000 tons of feed had to be procured from other feed mills at higher prices. “Load-shedding also negatively affected the cost recovery in the feed mills.”
The company said its businesses in the rest of Africa performed poorly. In Zambia, the increase in raw material costs could not be recovered in egg prices.
“In Uganda the operational business performance was satisfactory, but the business also had to contend with higher raw material costs. A decision was made to empty the breeder farm in Kampala completely due to a recurring disease challenge that adversely affected productivity,” Quantum said.
The company expects the decline in egg prices and higher feed input costs to persist, putting pressure on its profitability for the remainder of the year.
Quantum’s interim revenue increased by 3.3% to R2.1bn, while operating profit fell 51% to R121m. Headline earnings per share were down 45% to 45.4c per share.
The company declared an interim dividend of 8c per share, which is down 60% compared to the 20c declared in the comparative period in 2018.
Quantum’s share price was down 0.28% to close at R3.61.