Cracking results from Quantum Foods

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Cracking results from Quantum Foods

Published Date: 2018-11-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

Cracking results from Quantum Foods

The poultry group has raised its total dividend for the year by 165%, including a special dividend due to its healthy cash position.

Quantum Foods credits significant tailwinds for its egg business for a "truly exceptional" financial performance over the past year. The poultry group said the year was characterised by the impact of the highly pathogenic Avian Influenza (AI) outbreaks in SA, which resulted in a big increase in the price of eggs.

While the AI outbreaks resulted in increased biosecurity and logistics costs, there was a significant reduction in the feed volumes required by Quantum's internal layer farms. Raw material costs were also lower during the year thanks to good maize and soybean meal harvests in 2017. However, it said maize prices started to increase in February following a smaller maize crop this year. Overall, it says operational costs were well managed given the additional expenses incurred following the AI outbreak.

While egg volumes declined 7.4% year-on-year, prices increased by 23.7%, boosting the profitability of Quantum's egg business.

Its Other Africa businesses also performed well, with Uganda experiencing a turnaround, a good performance from Mega Eggs in Zambia and a maiden profit from Mozambique.

Group revenue increased by 1.7% to R4.12 billion, with a 1.4% increase in SA revenue and a 8.7% rise in Other Africa operations. Operating profit more than tripled to R472 million and headline earnings per share jumped 234% to 163.9c. It's raised its total dividend for the year by 165% to 90c, including a 49c special dividend due to its strong cash generation.

The group said while egg prices are expected to decrease in the year ahead due to the cyclical nature of the business, it's in a much stronger position to navigate the expected headwinds. Improved management and operational efficiency have been assessed by the replacement of egg grading and packing equipment in its largest packing stations. It said its broiler and feed businesses had also further demonstrated their resilience through their strong contributions to profitability.

Its shares closed 6.9% higher at R4.65.





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