Quantum Foods Holdings said on Friday that the highly pathogenic avian influenza (HPAI) outbreak will push the company into the red in the year to September 30.
The company, the largest egg producer in South Africa and an animal feed and poultry product producer for several African markets, had said in September that an HPAI outbreak had been detected at several of its farms in Gauteng and in North West Province, but at that point the full financial impact on the company was unknown.
At that stage, the outbreak appeared to be confined to the northern parts of the country, and Quantum’s farms in the Western Cape and Eastern Cape were unaffected. By that time, the financial impact was expected to be at least a 100 percent decline in headline earnings per share (HEPS) from the 14.1 cents reported for the previous financial year to September 30, 2023.
However, on Friday, Quantum said its HEPS was expected to decrease to a loss of between 16.7 cents and 18.1 cents per share, compared with the 14.1 cents reported for the prior financial year.
Earnings per share (EPS) was expected to be between 17.2 cents and 18.4 cents loss per share from the 12 cents EPS reported for the prior corresponding period.
The HEPS and EPS would include a R155.3 million loss, being the value of biological assets written off due to the HPAI outbreaks.
This loss affected both HEPS and EPS by 56.8 cents. The full financial results are expected to be published on December 1.
Quantum’s share price was trading 0.69% higher at R4.35 on Friday, and the price has fallen from R4.85 three months ago in thin trade.
At the end of the six months to March 31, Quantum’s HEPS had already fallen 82% compared with the prior comparative period to 2.9 cents from 15.8 cents per share, following what it termed was the most challenging reporting period in its history since listing on the JSE in 2014.
The challenges had included record-high feed raw material costs, a weaker rand, disrupted electricity supply and an inability to recover increased production costs from customers, especially in the egg market. Logistics costs had also remained high during the period.
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