Rainbow Chicken profit down 40%

Johannesburg - Poultry producer Rainbow Chicken on Tuesday reported a 39.6% decline in headline earnings to R318.8m for the year ended March.

However, the group said that excluding the unrealised losses on financial instruments used in the feed raw material procurement strategy, which amounted to some R153m, the decline moderates to 14.8%.

Diluted headline earnings per share for the year declined from 180.8c to 109.6c.

Revenue for the 12 months was up 14.4%, however, to R6.8bn.

The group declared a final dividend of 44 cents, bringing the total dividend for the year to 68 cents, which was the same as last year.

Looking ahead, Rainbow said that considering the global economic recession and its spill-over impact locally, consumer spending is expected to remain under pressure.

"Maize prices are likely to remain volatile but at lower levels and continue to trade around export parity. Soya prices are likely to remain under pressure due to lower anticipated crops, the threat of further strikes in Argentina and the continued exchange rate volatility.

"By virtue of Rainbow's forward procurement policy, feed prices are only expected to be meaningfully lower in the second six months of the 2010 financial year," the group stated.

"The lower anticipated feed prices and benefit of the unrealised procurement losses booked in 2009 are likely to have a favourable impact on earnings for the 2010 year," it added.

- I-Net Bridge