Rainbow targets 2010 sales goals

Johannesburg - Poultry group Rainbow Chicken has joined the ranks of food companies hoping to score big during the 2010 Fifa Cup.

Speaking after the release of the group's interim results to September, Rainbow directors said they expected the world cup, aided by anticipated economic recovery, to boost its fortunes for the 2011 financial year.

Rainbow is the chicken supplier of choice for many restaurants and fast food outlets including Spur, Chicken Licken, KFC, Nando's, Steers and Wimpy.

This was after the group reported on Thursday that its revenue growth was marginally up at R3.4bn from R3.3bn. Diluted headline earnings per share grew from 43c to 58c in the six months to September 2009, compared with the previous corresponding period. Operating profit was, however, up 42% to R248m and the group declared an interim dividend of 28 cents per share.

Group marketing and customer director Scott Pitman said growth had slowed during the period due to the recession, but the food services business had "shown resilience".

The company processes, distributes and markets fresh and frozen chickens. It operates in the local retail, wholesale and food service channels with four brands: Rainbow, Farmer Brown, Simply Chicken and Food Solutions.

CEO Miles Dally said the group expected trading conditions to remain challenging throughout the remainder of the current financial year because of the recession and increased unemployment.

He warned this would result in "softer demand" during the group's second half.

While Rainbow expects maize prices to remain low, it said this will nevertheless depend on weather conditions and the extent of local planting. However, the group said there is a better chance of a feed price drop if raw material costs stay at current lower levels.

"Soya prices are likely to remain volatile due to the lower crop expectation and threat of further strikes in Argentina, as well as the continued exchange rate volatility," said Dally.

- Fin24.com