Commenting on the results for the year to March, CEO Miles Dally said the group had failed to recover the 33.6% hike in feed costs by raising chicken prices. Feed raw material prices peaked at historically high levels in the past 12 months and remained unusually volatile.
Headline earnings declined 39.6% to R318,82m and the underlying operating profit declined 25% to R555m.
Dally said the hike in chicken prices would not restore the group's margins and recover costs, given the tough market conditions, which had hit consumer spending.
The company did not predict what its pricing would be for the year, but Dally expected feed prices to remain high. Maize prices would be volatile, he said, albeit at lower levels, while soya prices would stay high.
Rainbow declared a final dividend of 44c and increased revenue 14.4% to R6,8bn.
Dally said the value of the local chicken market rose to R17,7bn in the past year, while chicken imports decreased 38%, driven by the weaker currency, a shift by overseas suppliers to more profitable markets, and the effect of expanded local capacity.
He said the company, which invested R293,1m in capital expenditure, had invested heavily to invigorate its core products. “This included a concerted drive to provide consumers with better-quality branded chicken offerings,” he said.
“Added value products”, including viennas, polonies and braai offerings, showed substantial growth to meaningfully contribute to retail sales.
Dally said the food service channel had slowed in line with prevailing economic conditions. Falling revenues among major quick-service restaurants had put pressure on suppliers to reduce costs and explore cheaper alternatives.
The share price ended yesterday 1.49% weaker at R16.50.
Source: Business Day
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