Poultry producer, Rainbow Chicken, has reported diluted headline earnings per share of 126.3 cents for the six months ending in March from 119.7 cents a year ago, reports Business Live. Revenue was flat at 6.956 billion rand (ZAR) from ZAR6.953 billion a year ago, while operating profit was 2.8 per cent higher at ZAR534.4 million.

Rainbow's financial year-end has changed to the end of June to align with that of its holding company, Remgro. Audited results would be published for the 15 months ending in June in August, at which time the final dividend for the 2011 financial year would be declared, it said.

The company said chicken prices had remained low due to the pressure on consumers and the lower feed cost environment. As a consequence, the local chicken market was estimated to have declined by five per cent in the past 12 months to ZAR19.2 billion, with a 10 per cent realisation decline partially being offset by a six per cent volume growth. The additional volume was largely attributable to the 26 per cent increase in chicken imports over the comparable year.

International maize and soybean prices increased significantly over the past few months, testing the record levels reached during September 2008. The full extent of these increases on local raw material prices was partially offset by the strong rand, but would adversely affect food inflation going forward, it said.

Rainbow has restructured into two operating units, Rainbow and Vector, each with its own board and managing director. This was done to bring additional operational focus to the businesses and to free up the CEO and chief financial officer to focus on strategic growth opportunities for the group.

Rainbow said the second half saw an improved balance in supply and demand in the South African chicken market. Despite the tough trading environment, Rainbow's mainstream chicken saw volume growth accompanied by marginal price improvements.

Looking ahead, the group said the global economic recovery remained fragile, with growth in the local economy below the levels experienced prior to the recession.

Oil prices specifically are trading at relatively high levels, which affects related ethanol and maize markets. Rainbow said maize and soybean prices were likely to remain high and volatile, with any improvement in the low global stock levels dependant on the yield of the new northern hemisphere crops.

Local raw material price movements were anticipated to follow international price movements in the next six months, added the Business Live report.

"While chicken realisations have shown some improvement in recent months, they are expected to remain under pressure as a result of consumers' lower disposable income and the current higher level of imports," the group concluded.