Following its separation from RCL Foods earlier this year, Rainbow Chicken Ltd has published its first financial results as an independent entity, providing valuable insights into its performance. The report includes information and commentary extracted from the financial statements released by RCL Foods in September, covering fiscal years ending June 2023 and June 2024. This initiative is designed to furnish Rainbow shareholders with direct access to the company’s financial results. Overall, Rainbow Chicken attributes its improving performance to the successful execution of its turnaround plan, which is evident in the headline figures.
In the recently concluded fiscal year, the company experienced a notable 7.9% increase in revenue, reaching over 14.5 billion rand (approximately US$837 million). This increase can be traced to a combination of factors, including heightened sales volumes through both retail and wholesale channels and higher selling prices. Such revenue growth is a significant indicator of the company’s resilience and adaptability in a challenging market. Additionally, profitability has markedly improved, with Earnings Before Interest, Taxes, Depreciation, Amortization, and Impairments (EBITDA) soaring to just under ZAR 630 million, a substantial increase from ZAR 29.8 million in the previous year. This positive trend has resulted in an improvement of the EBITDA margin by 4.1 percentage points, rising from 0.2% to 4.3% over the same period. Rainbow attributes these gains to various factors, including enhanced agricultural performance, better processing yields, efficient cost management, favorable sales prices, and increased volumes sold through both retail and wholesale channels. Furthermore, reduced feed ingredient costs and a more reliable power supply have also contributed to the company’s positive financial trajectory.
Despite these encouraging developments, Rainbow Chicken faced significant challenges due to highly pathogenic avian influenza (HPAI), which impacted its bottom line. The financial repercussions of the avian flu amounted to nearly ZAR 203 million in the past year. This was primarily due to the need to import hatching eggs, elevated feed costs from extended flocks, expenses related to the safe disposal of culled birds, and additional cleaning and disinfection protocols. In response to the threat of HPAI outbreaks, the company took proactive measures, including relocating its Midrand breeder farm to an area with lower poultry density. Notably, Rainbow Chicken opted not to engage in a government-backed vaccination program, although it expressed general support for the initiative as a means to protect South African poultry. The company assessed the program as too complex and costly for implementation within its operations.
Looking ahead, Rainbow Chicken recognizes the financial pressures consumers in South Africa continue to face, compounded by historically high commodity prices. However, the company remains optimistic about its performance for the upcoming year, anticipating continued improvements in agricultural output and expanding sales opportunities. A significant aspect of the company’s strategy moving forward will involve adjustments related to its separation from RCL Foods. Audited results are expected to be released at the end of this month, which will differ from the financial statements made while Rainbow was still part of RCL Foods. These results will also include reconciliations of the differences identified.
As one of the largest poultry producers in South Africa and the African continent, Rainbow Chicken had an impressive production output of approximately 197 million chickens in 2023, as reported by
WATTPoultry.com’s Top Poultry Companies survey. The unbundling of its chicken business by RCL Foods culminated in Rainbow Chicken being listed on the Johannesburg Stock Exchange on June 26 of this year, marking a new chapter in its operations as an independent business. Overall, the financial results indicate a promising future for Rainbow Chicken Ltd as it navigates the complexities of its new status while striving for continued growth and improvement in a competitive market.
