Falling egg prices and poor Zambian harvest hit Quantum Foods

Western Cape-based poultry and animal-feeds business Quantum Foods says falling egg prices and a poor harvest in Zambia have weighed on its half-year profits.

Headline earnings per share (Heps) is expected to fall in a range of between 23% and 38% in the group’s six months to end-March from the previous period’s 45.4c.

Heps is a widely used profit measure in SA, stripping out exceptional or once-off items to give a better measure of underlying performance.

The group said there had been higher volumes of eggs sold during the period, but margins were lower as higher supply drove down prices. Feed costs also increased.

The group is also expected to report lower earnings from its rest-of-Africa operations.

This is mostly due to Zambia, where the “very poor” 2019 maize harvest resulted in materially higher feed costs, and consequently lower margins from eggs and lower demand from livestock customers.

The group said earnings had risen in its feeds and farming business, the latter due to higher volumes of live birds supplied by its Western Cape broiler farming operations.

The group said it continued to operate as an essential service, and while there had been no effect on operations from the Covid-19 pandemic so far, the effect on consumers was uncertain.

“The company is privileged to be part of the food supply chain and believes that the diversity and geographical spread of its operations, with sufficient access to funding facilities, should allow successful navigation through this period of uncertainty,” the group said.

Quantum’s share price has fallen almost 12% so far this year, giving it a market capitalisation of R722m yesterday morning.

Over the same period, the JSE has lost 23.39%. — BusinessLIVE