RCL FOODS has reported a 60.7% drop in headline earnings in its full-year results, which cover the 12 months to the end of June 2019, blaming an oversupplied poultry market and new taxes on sugar.

The South African food giant, which owns the country’s largest poultry integrator Rainbow Foods, announced headline earnings per share at 37.9ZAR¢, compared with 96.8 ZAR¢ the year before.

That is despite overall revenue rising 5.5% to R25.9bn (USD$ 1.71).

“The South African economic environment remains subdued, with low to negative GDP growth being reported over the year and rising unemployment rates,” said the financial report.

For chicken, the firm said local volume and imports had driven oversupply, and this was set against feed prices rising 11.2%.

Earnings before interest tax and amortisation (EBITDA) in the poultry division fell 54.1% when compared with the previous period, to R214.3m.

The report says “dumped” imports remain a challenge for poultry producers in the country, estimating that they make up 25% of the local poultry market.

“The excess supply created by dumping provided little opportunity to recover higher feed costs and severely affected profitability,” it explained.

“Chicken imports have grown, mainly from Brazil and America, and more recently the European Union Markets after the lifting of Avian Influenza bans against affected countries,” the report explains.

Poland recently regained access to the SA market for poultrymeat, accounting for much of a spike in exports from the EU to the country in the first six months of this year.

It adds agricultural performance was “negatively impacted by challenges experienced with Cobb’s breed performance… This matter has been addressed with Cobb Vantress international”.