Sunny side up for South Africa’s largest egg producer

Following a devastating bird flu outbreak and soaring operating costs, Quantum Foods has experienced a strong comeback, with its interim profit tripling. However, its outlook remains bleak.

Quantum Foods is a fully integrated and diversified feed, poultry and egg business with operations in South Africa, Zambia, Uganda and Mozambique.

It is South Africa’s largest producer of eggs, with its Nulaid business being the country’s leading consumer egg brand.

Quantum Foods released its results for the six months through March 2025 – the first half of its 2025 financial year – on Friday, 23 May.

The company reported a strong set of results, with a 19.64% increase in revenue to R3.60 billion, slightly higher than its 18.22% increase in cost of sales.

Quantum’s profit for the period grew by over 239.66%, from R44.19 million in H1 2024 to R150.08 million in H1 2025.

This means the company’s 2025 interim profit is nearly as high as the R160.40 million full-year profit it posted for the 2024 financial year.

Quantum’s earnings per share saw similar growth, up 237.10% from 22.1 cents to 74.5 cents per ordinary share.

It should be noted that Quantum’s results come from a low base in 2024, as the company faced significant challenges in this period.

In H1 2024, the company reported further outbreaks of highly pathogenic avian influenza (HPAI) in South Africa, impacting birds to the value of approximately R37 million. 

The bird flu outbreaks in 2023 and 2024 negatively affected Quantum’s earnings and resulted in reduced volumes of livestock, hatching eggs and table eggs.

In addition, the company incurred significant cleaning and disinfecting costs to prepare affected farms for future placement. Severe load-shedding also negatively affected earnings in the previous reporting period.

In contrast, for the first half of the 2025 financial year, the company benefited from improved throughput.

This is due to a recovery in its layer flock, minimal load-shedding in South Africa, relatively high egg selling prices and no bird flu outbreaks. 

In addition, feed costs for the H1 2025 reporting period were relatively stable compared to the previous period.

Grim outlook

Looking forward, the company said total egg production in South Africa is steadily increasing as the national flock recovers from the 2023 and 2024 bird flu outbreaks. 

Therefore, unless another outbreak occurs, the South African Poultry Association has forecasted national egg production to reach pre-2023 outbreak levels by mid-2025.

However, Quantum warned that the risk of another bird flu outbreak in South Africa is very high, especially as no local producers have been successful in their applications to vaccinate poultry.

“In the absence of vaccination, HPAI will remain a key risk factor that will continue to affect poultry businesses going forward, resulting in major uncertainty for the poultry industry, which could severely impact earnings,” the company warned.

In addition, it said egg prices in South Africa decreased towards the end of March 2025, and this trend is expected to continue in the second half of the 2025 financial year.

The company added that the risk of load-shedding remains high in South Africa. “Indications are that the national grid was under severe pressure for most of the current reporting period,” it said.

The company expects increased demand during winter to lead to more load-shedding, which will result in increased operational challenges and higher costs, negatively impacting the company’s earnings.

However, Quantum said it has a strategy to mitigate the risk of bird flu, which involves placing fewer layers in higher-risk geographical areas and sourcing layer hatching eggs from a larger number of geographically diverse breeder farms.

Quantum’s board did not declare an interim dividend for the first half of its 2025 financial year.