Quantum Foods’ full year operating profit plunge 11% despite growth in revenue

SOUTH AFRICA – Quantum Foods, South African animal feeds and poultry producer has reported that the group revenue for the year ended September 2020, increased by 15.3% to R5.1 billion (US$334m).

The company headquartered in South Africa also has operations in other African countries i.e. Zambia, Uganda and Mozambique, focusing primarily on production of animal feeds and layer & broiler farming.

Despite the rise in earnings, the company’s operating profit decreased by 11% to R218m (US$14.2m) from R245m (US$16m), attributed to the increase in cost of sales which rose by 16.2% to R3.9 billion.

Its headline earnings per share decreased 13% to 80.5 cents a share from the 92.3 cents per share of 2019.

During the period under review, the group’s capital expenditure amounted to R91 million (US$5.9m).

The main projects undertaken include the new layer breeder farm in Uganda; capacity expansion at the Malmesbury feed mill; an egg-grading machine for the East London packing station; and projects to ensure fire risk compliance.

Its headline earnings per share decreased 13% to 80.5 cents a share

According to the company, its 2020 performance was satisfactory against the backdrop of an economy that suffered the COVID-19 crisis as well as volatile industry conditions.

Quantum Foods was privileged to continue operations at full capacity, even during level 5 lockdown restrictions. “We are therefore grateful that we did not suffer the financial pressures that many participants in the South African economy endured,” the company indicated.

A change of shareholding was also witnessed during the year as Quantum Foods’ largest shareholder, Zeder Financial Services Ltd, sold its 61.6 million shares, representing 32.1% to Country Bird Holdings Proprietary Limited (CBH) for R308m (US$18m).

Subsequently, a private equity group based in Luxembourg, Aristotle Africa S.à r.l, purchased a significant number of Quantum Foods’ shares. They then became the largest shareholder in Quantum Foods, with CBH the second largest.

Astral Foods Limited (Astral), South Africa based integrated poultry producer also in turn acquired 6.42% beneficial interest in securities of the JSE-listed feed and poultry products firm, in a bid to protect its broiler supply agreement with the company amid the scramble for Quantum shares by third parties.

Going forward, the Quantum expects the next period to be challenging. However, the strength of the business portfolio, investments made in recent years to increase production capacity, maintenance of operational efficiency and a focus on cost management should ensure that they navigate through the period successfully.

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