Rainbow Chicken's H1 profit drops

South Africa's Rainbow Chicken posted Tuesday (Nov 23) a 5.2% dip in the first-half profit, hit by soft consumer demand and said it expects a rise in feed prices in the second-half.

Rainbow Chicken, South Africa's largest processor and marketer of chicken, reported headline earnings per share for the six-months to end-September of US$0.552 from US$0.582 in the same period last year.

Headline earnings are the main profit gauge in South Africa and exclude certain one-off, financial and non-trading items.

The company said poultry prices were under significant pressure as recession-hit consumers spend warily.

Retailers in Africa's biggest economy, which emerged from a recession in the third quarter of last year, have been squeezed as their customers battle with unemployment and high debt.

But the slow economic recovery and interest rates, which are at their lowest in 30 years, have inspired some retailers to make upbeat calls for consumer demand in the coming year.

Rainbow said revenue inched up 0.7% to 3.4 billion rand (US$483.4 million).

The company said it expects feed prices to be marginally higher in the next six months corn and soya prices climb. South African benchmark yellow corn, primarily used for feed, has surged from around 1,100 per tonne in June to around 1,400 rand (US$197.46) per tonne.

Rainbow shares, which have gained 9% so far this year, closed 1.45% higher at 17.50 rand (US$2.47) Tuesday (Nov 23), compared with a 1.62% fall in the Johannesburg's All-share Index.