This follows after [DATA SOV:Sovereign Food Investments Limited] changed its breed of bird, resulting in an eight per cent increase in the number of birds processed with bird weights remaining constant.
For the six months ended 31 August 2014, headline earnings per share increased significantly by 49 per cent from 18.9 cents for the prior period to 28.1 cents while earnings per share were up 47 per cent to 27.8 cents due to 21 per cent increase in revenue to 815 million rand.
Sales volumes hiked up by seven per cent due to a 12 per cent price increase offset by an 11 per cent and 10 per cent increase in feed costs per ton and non-feed costs per unit respectively.
The group generated cash from operating activities of 43 million rand, of which 16 million rand was invested in property, plant and equipment, 11 million rand went towards paying dividends and normal debt repayments amounted to 13 million rand.
A final dividend of 15 cents per share was declared for the year ended 28 February 2014. According to the company’s policies, shareholders should not expect an interim dividend for the current period.
(READ MORE: Sovereign Food’s revenue up by 10%)
The group’s performance was however impacted by an illegal industrial strike at its abattoir in August this year, reducing operating profits by 10 million rand and EBITDA margins by 1.2 per cent.
“This illegal action will also have an impact on the profitability of the second half of the year,” said the company in a statement.
In July 2014, anti- dumping duties were imposed against leg quarters imported from certain companies in Germany, the Netherlands and the United Kingdom. Sovereign Foods’ import volumes remained high during the period however; these duties may impact local poultry prices at a later stage.
“Consumer demand is expected to remain weak due to above inflation increases in energy and transport costs as well as lower availability of credit. The introduction of additional import tariffs should lead to a more stable balance between poultry supply and demand and bring some relief to the industry,” continued the statement.