JSE-listed poultry and animal feed producer Rainbow Chicken recorded a 7.7% year-on-year increase in revenue to R17.1-billion for the financial year ended June 28, while earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 101.8% year-on-year to R2.13-billion.

Earnings for the year increased by 134.8% to R1.34-billion. The company also reported increased cash and cash-equivalents of R2.4-billion, up from R1.8-billion in the prior financial year.

The company declared a final dividend of 45c a share, as well as a special dividend of 75c a share, which brings the total distribution for the year to 135c a share.

Headline earnings a share increased by 130.1% to 150.87c. Earnings a share similarly increased by 133.5% to 149.55c a share.

The improved performance was mainly driven by favourable market conditions, including higher demand for poultry products, lower commodity prices, complemented by strong agricultural and operational performance together with cost efficiencies, the company says.

The South African broiler industry experienced a positive trading environment, with solid market demand, firmer selling prices and lower feed costs. Reduced maize and soya prices, supported by healthy local crops and ample global supply, provided significant relief in a sector where animal feed remains the largest cost component.

Poultry volumes were also boosted by volatility in red meat and pork supply and pricing, following outbreaks of foot-and-mouth disease and swine flu.

However, constrained consumer spending remains a key challenge. As the cost of living has continued to escalate in South Africa, reduced disposable income has affected buying behaviour and this was particularly noticeable in the final trading quarter.

Many households have cut back spend on animal protein amid financial constraints, even though chicken remains the most affordable protein source, says Rainbow.

The sharply higher fuel costs in recent months have had a notable impact on disposable household income as well as costs throughout the supply chain, it adds.

The company's Chicken and Animal Feed divisions delivered pleasing full-year results, with the Animal Feed division continuing to focus on the balance between sales volumes and margins while maintaining consistent product quality and reliable supply, the company says.

Meanwhile, the company's capital expenditure (capex) during the year focused on strengthening operational resilience, biosecurity and regulatory compliance.

Key investments included enhanced biosecurity measures, farm ventilation upgrades to improve environmental control and bird welfare, breed hatchery infrastructure improvements, utility resilience projects and the replacement of aged agricultural infrastructure across laying and rearing farms.

Replacement capex including intangible assets was R565.4-million, up from R466.9-million in its prior financial year. Expansionary capex was R33.9-million, up from R24.5-million in the prior financial year.

Planned and ongoing projects include enhanced biosecurity infrastructure. Additional investments include hatchery enhancements and utility resilience projects aimed at improving power and water security, Rainbow says.

The group's capital investment requirements have been consolidated into a ten-year plan, addressing areas requiring improvement and upgrades, while also supporting growth and new technology.

This represents an investment not only in the company, but also in South Africa’s poultry industry, enabling it to compete favourably with the world’s lowest-cost producers, Rainbow says.

“The next phase of the group’s strategy focuses on growth to match demand, premiumisation, innovation and further value extraction, while maintaining resilience and profitability through the cycles expected from a commodity business.”

In terms of its outlook for the current financial year, Rainbow says industry research supports the view that chicken is well positioned as one of the most affordable and versatile proteins, with consumption expected to grow beyond 2030.

This provides a favourable long-term backdrop for Rainbow, although near-term conditions could be affected by consumer affordability pressures and potential increases in input prices.

Consumer affordability is expected to remain under pressure as elevated living costs continue to constrain household disposable income. This is likely to influence buying behaviour across protein categories, with some consumers seeking more affordable meal solutions, although chicken is expected to retain its position as the most affordable animal protein source.

Rainbow will continue engaging with government and industry stakeholders on measures that support the growth of the domestic poultry industry and ensure chicken remains accessible and affordable for all South African consumers, it says.