|
|
|
Fri 13 Jun 2025
Close: 999c 
Day's move: 174c (21.09%)
Volume: 30
Trades: 1
|
|
|
|
Revenue for the interim period rose to R3.6 billion (2024: R3.0 billion) while operating profit jumped to R204.5 million (2024: R55.4 million). Profit for the period attributable to owners of the parent soared to R150.1 million (2024: R44.2 million). In addition, headline earnings per share were reported 244% higher at 74.8 cps (2024: 21.7 cps).
Dividend
The board of directors resolved not to declare an interim dividend for the current reporting period (HY2024: Rnil).
Company outlook
Total egg production in South Africa is steadily increasing as the national flock recovers from the 2023 and 2024 HPAI outbreaks. In this regard, and in the absence of any new HPAI outbreaks, the South African Poultry Association has forecasted national egg production to be at pre-2023 HPAI outbreak levels by mid-2025.
Egg selling prices decreased towards the end of the current reporting period and are expected to decrease further in the second half of the financial year ending 30 September 2025 (“FY2025”).
The risk of an HPAI outbreak is regarded as very high for the remainder of FY2025, with an increased number of outbreaks reported in recent months in, inter alia, the USA, Europe, North Africa and West Africa. The stringent protocols for voluntary vaccination against HPAI published by the South African government remain prohibitive, with, to the best of the Company’s knowledge, no producers having been successful in their applications to vaccinate poultry.
In the absence of vaccination, HPAI will remain a key risk factor that will continue to affect poultry businesses going forward, resulting in major uncertainty for the poultry industry, which could severely impact earnings.
In order to mitigate this risk, the Company maintained the strategy introduced in 2024, which involves placing a reduced number of layers in higher-risk geographical areas and sourcing layer hatching eggs from a larger number of geographically diverse breeder farms when compared to the protocol that was in place prior to the 2023 HPAI outbreaks.
Feed raw material prices for the second half of FY2025 are expected to benefit from an improved South African grain harvest. However, this benefit could be offset by any significant movement in the value of the Rand against, mostly, the US Dollar, as well as changes in the international prices of feed raw materials. Geo-political tensions between the USA and many of its trading partners, especially China, are high and could significantly impact normal supply and demand dynamics, inter alia, impacting international raw material prices and the value of currencies.
Changes in feed raw material costs directly affect earnings derived from the Group’s egg business. Earnings from the feeds and farming businesses are more resilient to changes in feed raw material costs, as changes in input costs generally drive selling price adjustments in these businesses.
Earnings from the feeds and farming businesses are more dependent on volumes, operational efficiencies and cost management, which could be significantly impacted by any HPAI outbreak. These businesses performed well in the current reporting period, and maintaining earnings for the remainder of FY2025 will result in a satisfactory FY2025 financial performance.
The risk of load shedding remains high in South Africa. Indications are that the national grid was under severe pressure for most of the current reporting period, with an expectation of increased demand leading to more load shedding during the winter months, which form the bulk of the second half of FY2025. An increase in load shedding hours will result in increased operational challenges and higher costs, which will negatively impact the Company’s earnings.
Trading conditions in Zambia are expected to improve towards the end of FY2025. Maize and soybean harvests should benefit from much improved rainfall, and indications are that prices for these commodities will be lower. The improved rainfall should also benefit electricity generation from the Kariba hydroelectric facility and, together with lower feed input costs, could lead to an overall improvement in trading conditions, stimulate demand for day-old chicks and feed and support improved egg margins. A further factor in Zambia has been the continuous weakening of the Kwacha, which has resulted in cost increases and a reduction in the Rand value of earnings.
With the expectation of lower egg prices in South Africa in the second half of FY2025, egg prices in Mozambique are also expected to decline, leading to reduced egg margins during the second half of FY2025.
Trading conditions in Uganda are expected to remain favourable for the remainder of FY2025. Feed raw material costs are expected to remain relatively low, supporting demand for day-old chicks, feed volumes and egg margins.
|
| |
| Click here for Results In Brief |
| |
| Click here for Results Analysis |
| Closing price data source: JSE Ltd. All other statistics calculated by ProfileData. |
|
|
