Rainbow Chicken going from turnaround to titan

Rainbow Chicken has officially turned the corner following a years-long turnaround process, with the poultry and animal feed producer now able to focus on setting its business up for future success.

Notably, Rainbow Chicken’s turnaround was not due to improving macroeconomic conditions, with many of the same pressures it faced a few years ago still present, but rather due to its intense focus on getting the basics right.

Looking forward, Rainbow Chicken has several tailwinds at its back and now has its eye on ensuring the company is future-proof and able to play an important role in South Africa’s economic recovery.

Rainbow Chicken recently released its interim results for the six months through December 2025, which showed the effectiveness of the turnaround strategy it has been implementing for the past few years.

Its revenue from contracts with customers increased by over 11% to R8.79 billion, while its profit for the six-month period more than doubled to reach R663.84 million.

These strong results allowed the poultry producer to declare an interim dividend, its first since being unbundled and separately listed from its former parent company, RCL Foods.

Following the release of these results, Rainbow Chicken CEO Marthinus Stander told Daily Investor that the company’s turnaround was a 30-month process.

It started in September 2023, when the company still formed part of RCL Foods and was struggling amid frequent bouts of load-shedding and a widespread outbreak of Avian flu.

To make matters worse, the company faced a constrained consumer environment, with South African consumers still recovering from the Covid-19 pandemic, and historically high input costs due to surging maize prices.

The result of these strains was evident in Rainbow Chicken’s 2023 financial year, when the company found itself in the red, posting a loss of R286.03 million.

This loss included a R202.6 million hit the producer took from the Avian flu outbreak, which necessitated the culling of a significant number of breeder birds.

Controlling the controllables

This is when the Brilliant Basics strategy was introduced, which saw Rainbow Chicken focus on what it could control – farming practices, product quality, cost control, and investment in the group’s infrastructure and asset base.

It only took a year for this strategy to start paying dividends (figuratively speaking – the company would only pay its maiden dividend in 2025) as Rainbow Chicken came back swinging with a R164.46 million profit for its 2024 financial year.

In the year after, Rainbow Chicken kept its head down and maintained its intense focus on getting the basics right, and in its 2025 financial year, posted a R545.3 million profit – an increase of over 230%.

Now, halfway into its 2026 financial year, the poultry producer has already surpassed this full-year profit, setting it up for another strong set of results.

Stander explained that the Brilliant Basics strategy worked because it forced Rainbow Chicken to focus on things it could control.

This meant that, even though many of the pressures it faced in 2023 have persisted, including a constrained consumer environment and high maize prices, the company is far better positioned to withstand these challenges.

“We got a lot better at the basics because that was the stuff that was under our control at that time. We couldn’t influence the maize price, but we could influence our farming,” he said.

This involved looking at the business from a cost buildup perspective and analysing every part of the value chain, identifying every opportunity to cut costs without compromising outcomes.

Stander explained that even when all of the “obvious” costs are cut, there are always tweaks to be made, especially in an industry like agriculture where the genetics of your products keep improving.

He said the company experimented with different breeds and found the right nutrition mix to balance costs and outcomes.

It was also critical that Rainbow Chicken found the right balance with production volumes. When it comes to the chicken industry, higher volumes necessarily demand higher input costs in the form of increased feed, larger space requirements, and higher electricity and water bills.

Stander explained that the company could rely on economies of scale to an extent, but had to remain aware of rising input costs as its production increased.

The graph below shows the improvement in Rainbow Chicken’s EBITDA and EBITDA margin over the past few years.

Rainbow Chicken finding its wings

Ultimately, this intense focus on costs and getting the basics right now means that Rainbow Chicken does not talk about a “turnaround” anymore.

Instead, the company can now turn its focus towards growth, as opposed to recovery.

“We don’t talk of a turnaround anymore. We talk about margin improvement, efficiency improvement, that cost buildup and the KPIs,” Stander said.

In addition, the company can now play a large role in supporting small-scale emerging farmers. 

Over the past two years, Rainbow Chicken has doubled its processing capacity at its Hammarsdale facility, introduced new technologies and continued to improve its core asset base.

This integrated, shortened value chain enabled the company to support small-scale emerging farmers by supplying them with affordable day-old chicks and feed.

“Now we have a business called Rainbow Chicks, and we plan for this to be a R1 billion business within five years,” Stander said.

“Smaller farmers that operate in rural areas or wherever we can’t reach – they’re part of the value chain and food security, and they need chicks from somewhere, and they need feed from somewhere, and they need expertise from somewhere, so we provide all of those things.”

With Rainbow Chicken now focused on the future, Stander explained that the company is in the fortunate position of having several tailwinds supporting its growth.

This includes some cyclical factors, such as improved crops and harvests, leading to lower maize and soya prices. 

However, there have also been some unexpected blessings in disguise, with developments like the collapse of Daybreak Foods and an outbreak of foot-and-mouth disease in the red meat industry leading to an increase in demand for poultry products.

“It’s been pretty good – our engine room is purring, and we have the right people in the right seats,” Stander said.

“I think success breeds success, so I think it’s a nice upward curve, but at the same time, it’s farming, and we’re going to stay humble.”

Stander said there are risks to Rainbow Chicken’s sunny outlook, with notable threats presented by United States tariffs, the uncertainty surrounding the African Growth and Opportunity Act, and the war in the Middle East.

Domestically, Rainbow Chicken has also noted that, despite ongoing reforms in South Africa’s rail logistics network, it remains more cost-effective and efficient to transport products by road rather than rail.

In addition, water and energy security remain key strategic focus areas for the business, with Rainbow Chicken planning capital investments over the next five years to secure a reliable and affordable supply.

For the poultry industry as a whole, the risks posed by avian flu will always remain top of mind, with Stander saying it is a problem the world needs to solve, not just South Africa.

“It’s a food security risk for the world, so the world’s got to solve it somehow, and the export issues that go with it,” he said.

The graph below shows Rainbow Chicken’s fulfilment of its KPIs over the past few years.