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Rising Feed Costs Hit Rainbow Chicken Profits

by 5m Editor
24 November 2010, at 9:51am

SOUTH AFRICA - Rainbow Chicken reports a drop in first-half-year profits due to increasing feed prices.

Yesterday (23 November), South Africa's Rainbow Chicken posted a 5.2 per cent dip in first-half profit, hit by soft consumer demand and said it expects a rise in feed prices in the second-half, reports Africa Business News.

Rainbow, South Africa's largest processor and marketer of chicken, reported headline earnings per share for the six-months to end-September of 55.2 cents from 58.2 cents in the same period last year.

Headline earnings are the main profit gauge in South Africa and exclude certain one-off, financial and non-trading items.

The company said poultry prices were under significant pressure as recession-hit consumers spend warily.

Retailers in Africa's biggest economy, which emerged from a recession in the third quarter of last year, have been squeezed as their customers battle with unemployment and high debt.

But the slow economic recovery and interest rates, which are at their lowest in 30 years, have inspired some retailers to make upbeat calls for consumer demand in the coming year.

Rainbow said revenue inched up 0.7 per cent to 3.4 billion rand (ZAR; US$483.4 million).

The company said its expects feed prices to be marginally higher in the next six months maize and soya prices climb. South African benchmark yellow maize MAYc1, primarily used for feed, has surged from around ZAR1,100 per tonne in June to around ZAR1,400 per tonne.

Rainbow declared an interim dividend of 28 cents, unchanged from the same time a year earlier, concludes the report in Africa Business News.