August 21, 2013

Due to fallout from soaring input costs and record levels of imports, Rainbow Chicken warned of a sharp slump in annual profit.

According to BusinessReport, the company forecast earnings a share and headline earnings a share from continuing operations for the 12 months to June would be between 80% and 100% lower than those of the prior year.

Rainbow said the results were also affected by costs of ZAR45.6 million (US$4.5 million) for its acquisition of an effective 64.2% shareholding in New Foodcorp Holdings.

"Despite the inclusion of Foodcorp's trading results for two months (the effective date of the acquisition was 1 May 2013), earnings were negatively affected by the deterioration in the exchange rate impacting the valuation of Foodcorp's euro-denominated senior secured notes," Rainbow said in a trading update released after the market closed.

Rainbow closed 2.36% up at ZAR16.89 (US$1.70), while the food producer index increased by 0.2%.