Quantum Foods report 41% decline in HEPS despite rise in revenue triggered by high costs

SOUTH AFRICA – Quantum Foods, South African animal feeds and poultry producer, has reported 7% rise in group revenue in the six months ended March 2022 to R2.82 billion (US$182m) with a 5.6% top line gain of R140 million (US$9m) in its South African operations and a 29.9% increase of R44 million (US$2.8m) in other African operations’ revenue.

Revenue from home market grew by a lower margin compared to the rest of the continent, impacted by a decrease in external volumes sold of animal feeds which were offset by the adjustment of selling prices in respect of higher input costs.

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In addition, higher input costs in the broiler farming business and lower sales volumes of layer livestock impacted performance.

Revenue from other African operations increased mostly in Zambia, due to increased realisation in all product categories, and a stronger Zambian kwacha against the Rand, which increased the revenue included in the Group’s income statement.

The period under review had been challenging, which saw its headline earnings per share dropping by 41% to 15.8c owing to higher input costs and as general economic pressures on consumers increased.

Its cost of sales increased by 9.4% to R2.3 billion (US$148m) including a loss of R22 million (US$1.42m) resulting from the outbreak of HPAI at the Lemoenkloof Farm and the fair value adjustments of biological assets (livestock) and agricultural produce (eggs) that were realised and included in other gains and losses in the statement of comprehensive income.

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Gross profit, decreased by R12 million (US$770,000) to R544 million (US$35.12m) at a margin of 19.2%. Its aggregate cash operating expenses increased by 8.5% from the prior period.

The increase relative to the prior period was primarily driven by significant increases in energy and insurance costs, expenses for the Helderfontein broiler farm (acquired on 31 January 2021) and higher costs associated with the labour unrest at the Kaalfontein egg farm.

Overall operating profit decreased by 53.5% to R34 million (US$2.20m) as South African operations recorded a R36 million (US$2.32m) (55.9%) decrease in operating profit to R29 million (US$1.87m) at a margin of 1.1%.

Other African operations recorded a decrease in profit of R2 million (US$129,000), where the higher profitability from the Zambian and Mozambican businesses was offset by a decrease in profitability from the Ugandan business.

In other related news, the integrated poultry company, has announced the resignation of Ms Marisha Gibbons as its company secretary with effect from 26 May 2022.

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In turn Quantum Food has appointed Acorim Proprietary Limited, a company secretarial and corporate governance service provider, to take over the role.

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