Rainbow Chicken RBO experienced a profit increase over 14 times amid recovery from a bird flu outbreak, though it warns of future risks lacking an effective vaccination and compensation strategy. The company reported headline earnings of 317.6 million rand for the six months through December 2024, deciding to reinvest profits instead of paying dividends.
Rainbow Chicken RBO reported a remarkable increase in half-year profit, surging over 14 times as it recovered from South Africa’s most severe bird flu outbreak. The company, however, highlighted the threat of a potential resurgence due to the sluggish pace of the vaccination campaign against high-pathogenic avian influenza (HPAI). In 2023, South Africa witnessed a devastating loss, with one-third of its chicken flock affected by the outbreak, driving up egg prices and impacting poultry industries globally.
In the aftermath of the 2023 outbreak, South Africa’s poultry sector showed signs of recovery in 2024. Despite this, the industry remains vigilant against future outbreaks as the government-approved vaccination program faces challenges. Stakeholders have expressed concerns about the prohibitive costs of monitoring and testing, which hinder timely vaccinations. The South African Poultry Association is advocating for government subsidies for vaccinations and compensation for farmers suffering losses from the previous outbreak.
In its financial results, Rainbow Chicken stated, “The threat of Avian Influenza during the winter months is real.” The company emphasized that South Africa still needs to establish an effective response plan, particularly regarding compensation and vaccination strategies. For the financial period ending December 2024, Rainbow reported 317.6 million rand ($17.51 million) in headline earnings, a significant increase from 21.9 million rand in the same period in 2023.
The firm has opted to forego dividends in favor of reinvesting its cash flow into expanding infrastructure, striving to become a leading low-cost producer in the market. Rainbow, which produces various poultry products under its brands, was previously part of RCL Foods but became an independent entity when it was listed separately in June 2024.
In summary, Rainbow Chicken RBO’s impressive profit recovery highlights the resilience of South Africa’s poultry sector following a significant bird flu outbreak. However, the company and industry leaders remain cautious as challenges with vaccination initiatives and compensation strategies persist. The ongoing commitment to infrastructure investment positions Rainbow for future growth and market leadership in an evolving economic landscape.
Original Source: www.tradingview.com
