Miles Dally, Rainbow's chief executive, said: "With
extensive research into local and international consumer trends, we have
invested in a processing plant that will enable us to deliver differentiated
value-added products to our customers."
The completion of the R160 million (€20m) processing
plant in Hammarsdale enabled Rainbow to launch 66 new retail and food service
products during March.
These included ready-to-eat whole chickens, sliced
chicken, chicken mayonnaise mix and chicken nuggets, marketed through the Farmer
Brown and Rainbow brands.
Other investments that have been completed are the
upgrades to plants in Rustenburg and Worcester. Combined with the new
Hammarsdale plant, new investment totals R222 million (€26.8m).
Apart from these investments other factors also improved
performance. Rainbow reduced its supply to non-strategic, unprofitable third
parties like re-processors, which significantly improve its mix, which is
evident in the margin improvement.
Operating margin improved to 14.1%, compared with 7.8%
the year before, while cash generated by operations showed a 69.1% rise to R680
Group revenue increased marginally to R4.1 billion
(€496m). However, Rainbow achieved a 14% increase in chicken volumes to targeted
customers and in branded products.
Other factors behind Rainbow's performance included the
lower cost of maize, the better integration of the supply chain and the
inclusion of Vector's results for the full year.
Vector Logistics, which Rainbow acquired in December
2004, has secured new distribution contracts with Nando's, Spur and Willowton,
from January next year. Vector has also taken over the distribution of the
balance of Rainbow's volumes previously distributed by a third party.
Epol, Rainbow's feed unit, is still recovering volumes lost after
contaminated feed from a supplier, which dented the group's profit in the year
to March 2005. Rainbow said the feed industry was under pressure due to
overcapacity. To address this, the group is consolidating its feed operations by
closing down the Roodepoort mill.