Singaporean food producer and retailer QAF Group has warned it expects to post a pre-tax loss in the third quarter to the end of September as a result of losses incurred by its Australian subsidiary.

The company said that rising grain prices worldwide and the drought in Australia had led to higher costs for animal feed, reducing operating margins at its Australian subsidiary QAF Meats.

QAF said a cost reduction programme had been implemented at QAF Meats but it expected to incur operating losses at the subsidiary both for the current fiscal year and for 2008, which would affect group operating results for both of those periods.

However, following the group pre-tax loss in the third quarter, the company said it expects QAF Group to be back in profit in both the fourth quarter and the fiscal year to the end of December 2007.