South African poultry group Rainbow Chicken has seen annual profits tumble by almost 40% as feed costs jumped by more than a third.
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The company said yesterday (9 June) that headline earnings fell by 39.6% to ZAR318.8m (US$39.7m) for the year to 31 March.
Excluding losses on financial instruments used by Rainbow in procuring feed, the fall in earnings was lower, at 14.8%.
Operating profit was down by 45.7% at ZAR423.8m.
With feed costs soaring by 33.6%, earnings still fell despite a 14.4% rise in revenue to ZAR6.81bn.
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By GlobalDataRainbow warned that raw material costs were expected to be volatile in the months ahead, with a drop in feed prices only likely in the second half of its 2010 fiscal year.
“Maize prices are likely to remain volatile but at lower levels and continue to trade around export parity. Soya prices are likely to remain under pressure due to lower anticipated crops, the threat of further strikes in Argentina and the continued exchange rate volatility,” the company said.
“By virtue of Rainbow’s forward procurement policy, feed prices are only expected to be meaningfully lower in the second six months of the 2010 financial year.”
