Quantum Food’s decision to exit the broiler business by selling its Hartbeespoort abattoir to Sovereign Foods appears to have been wise, judging from the two poultry groups’ results.
Quantum reported on Thursday morning that it managed to remain profitable in the year to end-September, whereas Sovereign reported after the market closed on Wednesday that it plunged into an interim net loss of R36m for the six months to end-August from the matching period’s R67m profit.
Sovereign said its loss was "as a result of a 15% increase in the cost of feed per tonne due to the drought, coupled with a 3% decline in net selling prices following local oversupply conditions".
Although Quantum managed to remain profitable for the year to end-September — declaring a 6c dividend, down from the previous year’s 10c — its aftertax profit declined 28% to R91m.
Quantum splits itself into four divisions: eggs; farming; animal feeds; and other African countries.
Its overall revenue grew 13% to R3.9bn, boosted by a 29% surge in animal feed revenue to R1.4bn.
Its animal feed division grew operating profit 10% to R72m.
Its farming divisions doubled operating profit to R96m on the back of an 8% growth in revenue to R1.3bn.
The group said it positioned itself as a livestock farming business within the broiler supply chain following the sale of its Hartbeespoort abattoir to Sovereign.
Quantum’s egg division fell into a R27m loss from the previous year’s R32m profit, despite growing revenue 4% to R1bn.
Revenue from other African countries declined 11% to R160m and it contributed a R234,000 operating loss from the previous year’s R25m profit.
"In Zambia, the combination of drought, exchange-rate fluctuation, a commodity price slump, energy supply challenges and [an] oversupply of day-old broiler chicks, created a difficult environment," the company said.
"On the positive side, Quantum Foods completed the expansion of the Mega Eggs operation in Zambia during the year. Looking ahead, this will result in increased volumes of eggs available for sale."
In Uganda, Quantum completed its new commercial egg farm in Masindi.
In Mozambique, it acquired the country’s largest egg producer Galovos Eggs.
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