August 29, 2017 / 5:40 PM / 2 years ago

South Africa's RCL Foods finds bird flu at poultry farm

JOHANNESBURG (Reuters) - South Africa’s RCL Foods has found the highly pathogenic H5N8 bird flu at one of its poultry farms, it said on Tuesday, as it reported a 34 percent drop in full-year earnings due to a surge in input costs.

The outbreak of avian flu on South African farms has prompted neighboring countries including Zimbabwe, Namibia and Botswana to ban poultry imports from the country.

RCL financial director Rob Field said avian flu, which has already been detected on two farms belonging to fellow poultry producer Astral, was found on its breeder farm in Gauteng.

“We have had one incident at a breeder farm and fortunately the financial impact was negligible,” said Field, providing no further detail.

Astral last week said the cost of the outbreaks at its farms amounted to 50 million rand ($3.85 million).

Field said the pathogen was contained and it would continue to work with government and industry to stamp out the disease which poses little risk to human health.

The H5N8 strain has been detected in several countries in Europe, Africa and Asia over the past two years, with its spread aided by wild bird migrations.

RCL, which produces poultry, sugar and other foods, said southern Africa’s worst drought in decades had increased prices of the maize used to feed its chickens, hurting its margins.

Headline earnings per share, the main profit measure in South Africa that strips out certain one-off items, for the year through June fell to 63.5 cents, from 96.5 cents a year ago.

RCL announced in November it would cut poultry production and staff numbers as part of a restructuring effort amid stiff competition from imports from Brazil, Europe and the United States.

“Demand and volumes have become constricted and record drought-related hikes in input costs could in many cases not be passed on, leading to contracting margins,” it said in a statement.

RCL, which released the results after the market closed on Tuesday, said the outlook was improving.

“On the positive side, the record maize crop, adequate rainfalls, as well as an improved supply of other crops, should restore margins and contribute to welcome price relief for consumers,” it said.

Still, it cautioned the domestic food market remained oversupplied. “Poultry imports, and more recently, rapidly increasing sugar imports, have been adding pressure to domestic supplies,” the company said.

($1 = 12.9844 rand)

Reporting by TJ Strydom and Tanisha Heiberg; Editing by Mark Potter

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