Quantum Foods full-year revenue down 8.9%

Quantum Foods, a Cape Town-based egg, poultry, and animal feed producer, recently reported a decrease in revenue of 8.9% in its full-year results. Despite this decline, headline earnings saw a significant increase to 80.4 cents from a loss per share of 17.4 cents in the previous year. The CEO, Adel van Der Merwe, credits this improvement to various factors such as lower raw material prices, higher broiler efficiencies, higher egg prices, lower energy costs, and strong operational performance in Africa. The company, however, decided not to declare a dividend in light of these results. Adel van Der Merwe, the CEO of Quantum Foods, expressed his satisfaction with the overall financial and operational performance, highlighting the positive impact of market conditions such as lower raw material costs and higher egg prices. He acknowledged the challenges faced due to lower volumes caused by the AI outbreak in 2023, which continued into early 2024. Despite these hurdles, van Der Merwe remains optimistic about the future outlook for the company. Van Der Merwe also discussed the impact of soft commodities on the business, noting that international commodity price declines had helped offset the increase in local crop prices. However, he highlighted the potential challenges before the next maize and soybean harvest in South Africa. When assessing the different business segments of Quantum Foods, van Der Merwe emphasized the improvements in the feeds, broiler farming, and layer farming divisions. He noted a drop in feed volumes due to the AI outbreak, but expressed confidence in the business's recovery. The broiler farming segment saw significant profitability and operational enhancements, driven by improved breeder performance and operational efficiencies. On the other hand, the layer farming division experienced a recovery in volumes and operational costs after a slow start in the previous year. The CEO highlighted the risk of avian influenza in the egg business, impacting supply and demand dynamics in the market. Moving on to Quantum Foods' operations in Africa, van Der Merwe discussed the challenges faced in countries like Zambia, Uganda, and Mozambique. Despite the hurdles, he expressed satisfaction with the profitability contributions from these regions and emphasized the high margins in the Zambian business. Van Der Merwe also addressed the company's approach to workforce management, mentioning the retrenchments and layoff agreements that were necessary during the reporting period. He revealed that 157 employees were retrenched, but efforts were made to reinstate 289 employees who were initially placed on layoff agreements. In response to government initiatives and regulatory matters, van Der Merwe expressed optimism about engagements with the Department of Agriculture, particularly regarding vaccination protocols against AI. He also reassured investors about corporate and legal matters, affirming that the management team and board are confident in the company's strategic direction and governance practices. In conclusion, Quantum Foods' resilient performance amidst market challenges and the CEO's strategic insights position the company for potential growth and sustainability in the future.