After experiencing improved trade conditions, JSE-listed poultry producer Quantum Foods reported an operating profit increase of 234% year-on-year to R205-million for the six months ended March 31.

This compares with an operating profit of R61-million reported for the six months ended March 31, 2024.

Headline earnings per share increased from 21.7c in the prior comparable period to 74.8c in the six months under review, marking a 244% increase.

Earnings a share also increased significantly to 74.5c, compared with 22.1c in the prior comparable period.

The company has, however, not declared an interim dividend.

Quantum explains that the prior half-year period was ridden with outbreaks of highly pathogenic avian influenza, which impacted chickens to the value of R37-million for the group, including through reduced volumes of livestock, hatching eggs and table eggs.

The company has since benefitted from less loadshedding; a recovery in its layer flock and, as a result, improved throughput; no bird flu outbreaks; and relatively high egg selling prices.

Feed costs were relatively stable in the reporting period, Quantum confirms, explaining that the average price of yellow maize on the South African Futures Exchange increased by 28.1% in the reporting period but the average landed price of soya meal decreased by 16.8%, while the rand was about 3.4% stronger to the US dollar at the time.

The weighted average cost of layer and broiler feed decreased by 2.2% and 3.3%, respectively, for the six months under review, compared with the same months of last year.

Quantum’s egg supply averaged 78% higher in the current reporting period compared with the prior corresponding period, which allowed the company to resume operations at the Pinetown egg packing station after it was mothballed in the prior period owing to restricted egg supply.

The positive margin contribution from higher egg volume and operational efficiency at egg packing stations, coupled with cost controls and overhead cost recovery, outweighed the negative effect of a 14.1% lower average egg selling price in the six months under review.

Not only has Quantum managed to rebuild its layer flock following the bird flu outbreaks but it has also decided to convert a broiler farm and a layer rearing farm in Gauteng into broiler breeder farms.

The farms will, once completed and with the breeder birds in production, increase hatching egg production volumes in the vicinity of the Hartbeespoort hatchery and thereby reduce the number of hatching eggs required to be transferred to this facility from the Western Cape.

Quantum also plans to expand production capacity at its Malmesbury feed mill, with production scheduled to start in the second quarter of the financial year ending September 30, 2026.

Total feed volumes supplied in the period under review increased by 15.1% year-on-year.

In respect of other regions where Quantum operates, trading conditions in Zambia remained challenging owing to droughts and higher feed raw material costs, as well as increased loadshedding hours in the country on the back of lower hydroelectric generation capacity.

While demand for eggs in Zambia remained strong, the demand for day-old chicks and feed remained muted.

In Uganda, trading conditions were favourable, with relatively low feed costs and stable demand for eggs and day-old chicks.

Operations in Mozambique were sporadically impacted by protest action following the general election in that country on October 9, 2024. However, this supported higher selling prices for eggs as there was lower availability in the market.

The company recorded a theft incident in Mozambique in December, with a crowd having forcibly entered a layer farm and looted about 16% of the layer birds. Quantum confirms that operations were able to resume shortly after the incident, but the resultant lower egg production contributed to lower earnings in this business in the six months under review.

As of March 31, Quantum had cash and cash equivalents on hand of R312-million following an inflow of R231-million in cash from operating activities in the period under review.

The risk of another bird flu outbreak remains very high for the remainder of the 2025 financial year, especially since an increased number of outbreaks have been reported in the US, Europe, North Africa and West Africa.

Quantum believes the stringent protocols for voluntary vaccination against bird flu in South Africa remain prohibitive, with no producers so far having been successful in their application to vaccinate chickens.