Cracks beginning to show in egg industry

DROUGHT and a national oversupply of eggs continues to fry Farm Pride Foods’ revenue as shares in the egg producer hit a three-year low after a bleak trading update.

Farm Pride said it expects factors placing significant pressure on trading conditions, namely dry weather and an egg oversupply, not to let up any time soon.

The company said it expects its half-year earnings before interest, tax, depreciation and amortisation to be range between $500,000 and $600,000, down about 85 per cent from the $4.58 million reported for the corresponding period last year.

The trading update was lodged with the bourse after the close of trade on Tuesday.

The company had already seen its net profit plunge 94 per cent to $503,000 in 2017-18, while total revenue dropped 11.9 per cent to $86.12 million.

“Our feed costs moved higher in November and December as we closed out forward wheat contracts,” the company said in a statement.

“We currently do not see any relief in the oversupply of eggs and expect current grain pricing to remain until firsthalf 2020”.

In October the company said the egg industry was bearing the brunt of the driest January-September since 1902, with climate change a driver for increasing grain costs and future welfare issues.

Like other producers, it is also transitioning to cage-free and free-range production set=ups to meet the requirements of customers and new free-range rules.

Shares in Farm Pride rose 1.29 per cent yesterday to close at 78¢.