Rainbow Chicken expects lower profit levels

 

 

Rainbow Chicken, supplier of poultry to fast-food chains KFC and Nando's, warned that profit levels will be lower despite higher chicken sales.

 

Consumers will continue to buy less chicken due to the economic recession and job loss statistics, putting pressure on margins, said Durban-based Rainbow Chicken.

 

Rainbow's chicken sales revenue in the six months to September grew 4.7 percent to ZAR2.6 billion.

 

Pretax profit jumped 37 percent to ZAR249 million, although this was distorted by the inclusion of financial instruments used in the feed procurement strategy.

 

Rainbow is now selling more higher-value products that give better profit, doubling volumes of crumbed frozen food over the past year.

 

The rate of feed price increase had come down, but high inflation rates for the past two years caused the company to reap limited benefits, said Rainbow.

 

Rainbow also had to compete with a higher level of imported chickens, mostly from Brazil and Argentina, as a result of the stronger rand.

 

Total chicken imports have increased 50 percent over the past six months, accounting for a six to eight percent market share, largely due to the strengthening of the rand, said the company.

 

The local chicken market grew 17 percent in rand value over the past 12 months to ZAR20.7 billion, the company said.

 

US$1 = ZAR7.55 (Nov 23)