Quantum Foods Holding said the cost of producing poultry products is rising amid higher input expenses, and the South African chicken company spun off from Pioneer Foods last year is working out whether it can pass this on to consumers.
“The higher raw-material prices from May, June will start hitting our income statement,” Chief Executive Officer Hennie Lourens said in an interview in Johannesburg Tuesday. “Whether it’s possible to pass those higher input costs on to our customer base, it’s a matter to be seen. We certainly hope so.”
Profit excluding one-time items more than doubled to R61 million ($5 million) in the first half ended March 31 from a year earlier, Quantum said in a statement Monday. It rose after soymeal and corn feed costs declined following higher international stocks, and as egg prices increased.
The price of yellow corn, which is used to feed animals in South Africa, has increased 11% this year. Farms in the main growing provinces of the Free State and North West didn’t receive enough rain during planting following the worst drought since 1992. The nation is forecast to produce 5.1 million tons of yellow corn this season, according to the nation’s Crop Estimates Committee.
Soybeans fell 0.1% to R4,619 a ton in Johannesburg, paring the decline this year to 20%.
“If we don’t get the prices up, our margins will close and our profitability will suffer,” Lourens said.
Shares in Quantum, based in Wellington in the Western Cape province, declined 3.42% to R3.67 at the close in Johannesburg, paring their gain this year to 17%.
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