Rainbow Chicken has reported a significant improvement in profitability at the halfway mark of its financial year, with headline earnings per share (HEPS) soaring from 2.46 cents a year ago to 35.64 cents. The group attributed this success to a combination of operational efficiencies, stronger agricultural performance, and a disciplined cost-management approach. Lower commodity prices and a reduction in costs related to load-shedding and Avian Influenza also contributed to the positive results. Revenue increased by 8.9% to R7.89 billion, driven by higher sales volumes and improved product mix management. Meanwhile, earnings before interest, tax, depreciation, and amortisation (EBITDA) more than doubled to R581.1 million, and attributable profit surged from R21.03 million to R317 million.
Despite its strong financial position, Rainbow’s board opted not to declare an interim dividend, choosing instead to reinvest free cash flows into expanding its infrastructure. The company reaffirmed its commitment to its “Brilliant Basics” strategy, focusing on sustainable growth and enhanced farming practices. While consumer affordability remains a concern, Rainbow pointed to early signs of economic improvement in South Africa, including lower interest rates and increased political stability, which could support stronger sales in the second half of the financial year. However, the company warned that the risk of Avian Influenza during winter remains a challenge and called for a more structured national response, including a compensation and vaccination strategy to protect the poultry industry.
Rainbow also highlighted ongoing challenges in South Africa’s poultry sector, including the slow progress in accessing export markets under the Poultry Master Plan. Imported chicken, particularly from Brazil, the US, and the EU, continues to disrupt local market dynamics, with foreign products accounting for up to 20% of domestic consumption. Additionally, inefficiencies in South Africa’s rail network remain a barrier to cost-effective raw material distribution, particularly for maize, a key poultry feed component. The company stressed the need for urgent collaboration between government and business to resolve freight logistics issues and drive supply chain reforms that would enhance South Africa’s competitiveness in the poultry sector. Rainbow remains focused on cost reduction within its integrated value chain to maintain its growth trajectory and secure its position as a market-leading, low-cost chicken producer.