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SA's biggest egg producer, Quantum Foods, said on Tuesday its profit slump for its half-year to end March won't be as bad as previously feared in part due to demand picking up. But it has since been forced to kill 420 000 chickens at one of its farms in the Western Cape due to an outbreak of avian influenza.
The outbreak also risks a further reduction in egg production, it warned.
Quantum said the outbreak at the Lemoenkloof layer farm in the second half of April 2023 had affected nearby farms, and along with a direct cost of R34 million, would prompt additional costs in terms of supplying the province with eggs.
Quantum also suffered an avian influenza outbreak in 2022 that only affected Lemoenkloof, unlike previous outbreaks in 2017, 2018 and 2021 that affected the region.
Lemoenkloof supplies about 13% of Quantum's eggs, and the company had started repopulating the farm in July 2022 after culling 400 000 hens.
Quantum, valued at less than R1 billion on the JSE, produced more than one billion eggs in 2022 and 76 million day-old chicks, but like its industry peers, it's been hard hit by load shedding and a surge in feed costs, along with a persistent risk of disease outbreaks.
In February, the company warned it expected to swing into a loss in its half year to end-March, but it said on Tuesday it only expects its headline earnings per share to fall as much as 87%. The company booked headline earnings of about R33 million in its prior half year.
Quantum said on Tuesday the improved profit guidance follows better operational efficiencies and financial performance for the layer farming business, as well as improved trading conditions for the eggs business during February and March.
Shares in Quantum were unchanged on Tuesday afternoon, but have lost more than 11% over the past year. Click here for details of Quantum's shares as well as other info.
