JSE-listed food and animal feed producer Rainbow Chicken reported a 1 348.8% year-on-year increase in headline earnings per share (HEPS) to 35.64c for the six months ended December 29.

Earnings per share increased by 1 407.6% year-on-year to 35.58c.

Revenue increased by 8.9% year-on-year to R7.9-billion, largely owing to the increased sales in the Chicken Division.

These results are its first set of interim results released as a separately listed entity post the unbundling from RCL Foods.

Earnings before interest, taxes, depreciation and amortisation increased by R315.7-million to R581.1-million, which was a significantly increased margin of 7.4% compared to the 3.7% achieved at the end of December 2023.

The positive momentum of Rainbow’s turnaround strategy and improved profitability has continued in the first half of the financial year, the company said on March 7.

Further, net finance costs decreased by R118.7-million, primarily owing to the reduction in gearing following the debt-to-equity loan conversion from RCL FOODS executed during February and May 2024.

Additionally, a stronger cash position, resulting from enhanced profitability, contributed to the reduction in finance costs.

Rainbow Chicken generated R755.1-million cash, up by 49.2% compared with the interim period to end December 2023.

Replacement capital expenditure (capex) for the six-month period amounted to R196.3-million and expansion capex was R17.3-million. The majority of the replacement capex related to the maintenance of the existing asset base, Rainbow said.

The group’s total debt has decreased by R3.2-billion compared to December 2023. This reduction is mainly owing to the debt-to-equity loan recapitalisations effected in February and May 2024. This impact had a corresponding increase in the share capital balance.

The company did not declare an interim dividend. With a strong balance sheet and improved farming production practices, Rainbow’s focus remains on advancing its Brilliant Basics strategy for the second half of the financial year.

This approach will help the company deliver on its ambition of becoming a market-leading, low-cost chicken producer in the South African environment and deliver on its sustainability goals, thereby ensuring that Rainbow is best placed to fulfil its purpose of nourishing the nation, said CEO Marthinus Stander.

“While the high cost of living for consumers continues to be a concern, there are encouraging green shoots emerging in South Africa. The gradual reduction in interest rates over the past few months and a level of political stability provide some prospect for economic growth as well as reduced pressure on consumer spending.”

These developments bode well for sales in the second half of the year, he added.

However, Rainbow remained concerned about potential service delivery interruptions, with particular reference to water, water quality and electricity, he highlighted.

Further, the threat of avian influenza during the winter months was real and Rainbow would continue to manage an extremely focused biosecurity regime. As a country, South Africa was yet to find an optimal response to this threat with specific reference to compensation and vaccination strategy, he added.

“Rainbow’s goal remains to deliver exceptional value through innovative products and a product mix that responds to market, brand and customer fundamentals. Reducing costs across Rainbow’s strengthened integrated value chain, where these can be controlled, remains a major focus area.

“The company will continue implementing its strategic vision through a strong and consistent focus on best-in-class farming practices, product quality, cost control and investment in the group’s infrastructure and asset base,” Stander said.