Drought and the national oversupply of eggs continues to fry Farm Pride Foods’ revenue, with shares in the egg producer dropping to a three-year low after a bleak trading update.
Farm Pride told the market after Tuesday’s close it expects factors placing significant pressure on trading conditions – namely dry weather and oversupply – not to let up any time soon.
The company said it expects its half-year earnings before interest, tax, depreciation and amortisation to be about $500,000 to $600,000 – down about 85 per cent from the $4.58 million reported for the corresponding period last year.
The company had already seen its net profit plunge 94 per cent to $503,000 in the 2018 financial year, while total revenue dropped 11.9 per cent to $86.12 million in the same period.
‘Our feed costs moved higher in November and December as we closed out forward wheat contracts,’
‘We currently do not see any relief in the oversupply of eggs and expect current grain pricing to remain until first-half 2020’.
Shares in Farm Pride Foods were 2.6 per cent lower at 75 cents at 1255 AEDT on Wednesday, the lowest level in just over three years and more than 70 per cent down on the July 2016 peak of $2.53.
In October the company said the egg industry was bearing the brunt of the driest January-September since 1902, with climate change a driver for increasing grain costs and future welfare issues.
Like other producers, it is also transitioning to cage-free and free-range production set ups to meet the requirements of customers and new free-range rules.
Former chief executive Bruce De Lacy announced his resignation in September and was replaced by Daryl Bird.