SOUTH AFRICA -Daybreak Farms Pty Ltd, a leading South African poultry producer, has announced a debt deal worth R250 million (US$13 million) to stabilize its operations and optimize its balance sheet.
According to the company, the move comes on the heels of recent successful restructuring efforts and the appointment of a new executive team.
Under the leadership of Richard Manzini, Daybreak Farms underwent a comprehensive restructuring process in 2023.
In addition, the company recently announced a new C-suite team to support its ongoing growth plans.
Manzini, who previously served at the Public Investment Corporation (PIC), was appointed CEO in January 2024 after playing a pivotal role in turning around Daybreak Farms as a board member.
Despite the challenges faced by the poultry industry in 2023, Daybreak Farms is now on track to achieve profitability, thanks to strengthened corporate governance measures.
Manzini implemented stringent financial controls starting in July 2023, which helped the company manage its cash flow effectively during the Avian Flu Pandemic, even without access to a revolving facility or support from shareholders.
This focus on financial stability has bolstered the company’s fundamental strengths, cost efficiencies, and treasury management.
Manzini outlined the company’s plan to raise R250 million in loans, stating that it would take about 18 months to address the balance sheet.
“We need about 18 months to sort out the balance sheet, starting with raising the R250 million in loans,” he said.
“South Africa, being the largest producer of chicken in Africa, presents ample opportunities for consolidation and deal activity.”
He added that with the company currently holding approximately 7% of the South African chicken market, Daybreak Farms anticipates steady growth in the future.
Additionally, he noted that the funds raised through the debt deal will be allocated towards technology upgrades for Daybreak’s abattoirs and machines, as well as the development of a water treatment plant.
He revealed that the company also plans to increase the speed of its chicken processing systems.
Meanwhile, Daybreak Farms supplies day-old chicks to its own and contracted broiler farms, which are then raised and sold as fresh and frozen whole chickens and portions.
Manzini highlighted the growing popularity of fresh chicken portions, especially in light of recent power cuts.
“We are planning to tilt one of our abattoirs to focus more on fresh product mix, and we are also in talks with a broader client base,” Manzini said.
“The plan is to take processing from 1.5 million chickens a week to about 1.9 million chickens a week in the next few months.”
While the company’s capital expenditure is currently high, with costs for maintenance and repairs accounting for about 30% of expenses, these investments are deemed essential for Daybreak Farms’ turnaround.
The restructuring of the company’s balance sheet could pave the way for additional investment rounds to further advance its strategic direction as a protein foods business.
Manzini reiterated the company’s mission to regain a strong market position, emphasizing the importance of its 3,400 employees in achieving this goal.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. HERE
