• Quantum Foods is the largest egg producer in South Africa.
  • It was hit, hard, by avian flu – aggravated by drought and resulting high input costs.
  • On Wednesday it said it would soon report a 516% increase in headline earnings per share, and investors were overjoyed.

Quantum Foods will report at least a 516% increase in headline earnings per share (HEPS) for the six months to the end of March, the company told investors in a trading update on Wednesday. Shares price quickly shot up from around R4 to around R5 – gains it held on to on Thursday.

That may be good news for listeria-hit companies still in the middle of their own crisis.

In the middle of 2017 Quantum "depopulated" two of its sites of chickens after an outbreak of Avian Influenza – which the company said was despite stringent bio-security measures.

The company quickly ramped up other farms to bring its egg production back up to the usual levels. It has not yet reported its subsequent numbers, but Wednesday's trading statement suggests the plan worked.

Quantum is the biggest egg producer in South Africa and operates its own Nulaid Eggs brand was well as the Nova Feeds business, on top of a broiler-chicken operation.

Source: IG Group

The bird flu outbreak was compounded by the worst drought in 40 years, which caused Quantum's input costs to spike even as output plummeted.

Input costs have since decreased. The low input costs are seeing a good performance from food stocks, said equity analyst Anthony Clark, who runs a portfolio of food stocks at Vunani Securities.

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