Chicken and egg tail­winds

Financial Mail - - DIAMONDS & DOGS -

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

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