Bird Flu Outbreak Strikes Quantum Foods Farms – Impact on Industry and Company Uncertain

Some Quantum Foods farms have bird flu in Gauteng and the North-West province. After the company made this announcement, it raised concerns for the company and the broader poultry industry, grappling with a widespread outbreak of highly pathogenic avian influenza (HPAI), a contagious airborne disease affecting birds.

According to a statement released by Quantum Foods, the HPAI outbreak has so far impacted approximately 1.5 million of the company’s layer and breeding stock, as per IOL. The company also noted that a previous HPAI outbreak had affected around 420,000 layer birds at the Lemoenkloof layer farm in the Western Cape in April 2023.

The financial repercussions of this recent outbreak remain uncertain. Quantum Foods stated that it could only determine the full extent of the outbreak’s impact on the South African poultry industry and its financial effects on the company in the coming months. As of September 21, 2023, the estimated value of the company’s birds affected by the HPAI outbreak stood at R106 million.

However, Quantum Foods highlighted that the outbreak seemed to be confined primarily to the northern regions of South Africa, with no reported impact on its operations in the Western Cape and the Eastern Cape.

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Shareholders received further news that, for the financial year ending September 30, 2023, Quantum Foods will likely report a considerable decrease in headline earnings per share (HEPS), which will be at least 100% lower than the 14.1 cents reported for the previous financial year. Similarly, earnings per share (EPS) will plummet by at least 100%, or 12.0 cents, lower than the 12.0 cents reported for the corresponding period.

This decline implies that Quantum Foods is anticipated to post losses in both HEPS and EPS for the current reporting period, a challenging situation influenced by the HPAI outbreak and its far-reaching consequences.

Astral Foods, another prominent player in the South African poultry sector, also disclosed an avian flu outbreak in a related development. Alongside this announcement, the company released a voluntary trading statement, revealing its expectation of posting losses this year, exacerbated by substantial expenses of approximately R919 million to counteract the effects of load shedding.

Astral Foods indicated that its EPS for the year ending September may plummet by 165%, resulting in a loss of R18.08 per share compared to the R27.81 reported in the previous financial year. Despite these challenges, Astral Foods’ share price concluded the week with an 11.63% increase, closing at R4.66. The company’s financial outlook and resilience in the face of these challenges will be closely monitored in the coming months.

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Picture: Unsplash / Ben Moreland

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