Rainbow Chicken RBO sees a 14-fold profit increase in half-year results as recovery from avian influenza continues, but warns of future threats due to a slow vaccination program. The company emphasizes the need for government support to ensure sector stability amidst health risks.
Rainbow Chicken RBO, based in South Africa, reported a remarkable increase in half-year profits, surging over 14 times as the company recovers from the severe avian flu outbreak previously faced. The firm emphasizes the potential risk of a new bird flu outbreak due to an ineffective vaccination campaign, as South Africa struggled to manage its poultry health adequately.
In 2023, South Africa experienced a catastrophic loss, losing one-third of its national chicken flock to high-pathogenic avian influenza (HPAI). This viral disease has caused significant damage to poultry industries worldwide, disrupting supply chains and leading to substantial price increases for eggs and chicken products.
Although the poultry sector in South Africa showed signs of recovery in 2024, stakeholders remain vigilant about the risk of another outbreak. A lack of success in the government-approved vaccination program, attributed to high costs associated with monitoring and testing, is a significant concern.
The South African Poultry Association is advocating for government support in the form of vaccination subsidies and compensation for farmers affected by previous outbreaks. Rainbow highlighted the serious risk posed by avian influenza during winter months and expressed concern over the country’s current response strategies regarding compensation and vaccination.
For the six months ending December 2024, Rainbow reported headline earnings of 317.6 million rand ($17.51 million), compared to 21.9 million rand in the same period of 2023. The company opted not to pay dividends, opting instead to reinvest free cash flow into infrastructure development, aiming to establish itself as a market-leading, low-cost poultry producer. Rainbow, which produces chicken products under several brands, was separated from RCL Foods and listed independently in June.
Rainbow Chicken RBO’s substantial profit increase indicates a recovery from prior avian flu impacts, but risks remain from potential future outbreaks. The company and industry stakeholders express the need for improved vaccination strategies and government subsidies to protect the poultry sector. Despite forgoing dividends in favor of infrastructure investment, Rainbow aims for market leadership in the poultry industry.
Original Source: www.tradingview.com
