SOUTH AFRICA – In a bid to strengthen its financial position, JSE-listed integrated poultry producer Astral Foods has successfully disposed of its 9.8% interest in Quantum Foods for a sum of R141.7 million.

According to the company’s CEO Schutte, Astral initially acquired the 9.8% equity stake in Quantum Foods in June 2020, primarily to secure the supply of live broilers to Astral’s County Fair operation in the Western Cape.

“Quantum has been a crucial supplier, providing approximately 600,000 broilers per week, which accounts for about 35% of County Fair’s total slaughter capacity,” he explained.

With a five-year term remaining on the existing broiler supply agreement, Schutte noted that Astral has ample time to implement mitigating actions in the event of any threats to the supply agreement at the end of the contractual period.

The unexpected offer from Country Bird prompted Astral to reevaluate its investment in Quantum Foods.

Seizing the opportunity, Astral opted to divest its passive minority interest in Quantum, clarifying that the initial investment was never intended to be a long-term commitment for the group.

Schutte emphasized that the cash injection from this transaction would play a pivotal role in rebuilding Astral’s balance sheet, which suffered setbacks from various challenges faced in 2023.

This announcement follows closely on the heels of RCL Foods’ decision to unbundle and list its Rainbow Poultry business.

RCL Foods, a South African food major, expressed that this move would enable both businesses to pursue their respective growth ambitions with improved alignment on capital allocation priorities.

Despite the challenging trading environment characterized by high input costs, power outages, and a weak rand/dollar exchange rate, RCL Foods reported positive interim results for the six months to December 2023.

Revenues were up 8.4% year-on-year to R20.1 billion (US$1.05 billion), and EBITDA witnessed a substantial increase of 48.6% to R506.8 million.

The remarkable EBITDA hike was primarily attributed to the strong performance of Rainbow, which experienced a 10.8% year-on-year increase to R276.7 million, along with contributions from the sugar segment.

RCL Foods, operating across various grocery categories and in the pet food sector, has been undergoing a strategic review of its business.

The unbundling of its Rainbow arm, receiving board approval, is expected to lead to a concurrent listing on the Johannesburg Stock Exchange.

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