Chicken and egg tailwinds

Apart from the occasional philosophical musing around its timing versus the chicken’s, the humble egg rarely gets much consideration in the intellectual life of the nation. Yet this modest miracle of engineering is a wonder of nutrition, and its plate-based partnership with a few rashers of well-fried streaky is a classic that hits the spot every time. Still less consideration is given to the tireless efforts of our feathered friends in churning them out so assiduously to so little personal benefit, yet Quantum Food profits handsomely from their endeavours.

Quantum has had an exceptional year, benefiting from what it describes as significant tailwinds in the egg business. Anybody who’s had to endure a time in a confined space with somebody who’s got outside a couple of hard-boiled might think this was an unfortunate choice of phrase, but you can’t argue with a 234% rise in headline EPS. This success was caused largely by the pathogenic avian influenza outbreaks which started in 2017 and continued into 2018.

This caused the commercial layer population in SA to drop from 24.2million to 21-million, and the resultant egg shortage caused the egg price to rise 23.7% year on year. The other major driver was a fall in raw material costs after good maize and soybean harvests in 2017, and 2018’s harvest should be enough for domestic consumption. Looking ahead, the dynamics have changed to an oversupply situation, which will lead to a decrease in egg prices, but Quantum believes its improved efficiencies will help it demonstrate resilience in a tougher market.

Handsome profits from our feathered friends and, perversely, avian flu