Quantum Foods has reported higher first-half earnings thanks to an improvement in both the South African and African operating environments.However, the group warns that conflict in the Middle East and its adverse effects on global supply chains, particularly in relation to costs, are expected to result in a “significantly more challenging” second half.The group, which includes Nulaid eggs, Nova Feeds animal feed and Bergvlei Chicks in its brand portfolio, on Friday reported a 13% rise in operating profit for the six months ended March to R232m, despite revenue falling by 5% to R3.4bn.The South African operation’s revenue decreased 6.9%, which was partially offset by a 21.8% increase in the other African operations’ revenue. Excluding fair value adjustments, gross profit increased by R39m to R865m. The fair value adjustments for the current reporting period amounted to a profit of R99m.HEPS increased 16% to 86.5c. The company declared an interim dividend of 22c per share.The group said first-half trading conditions were generally more favourable than those experienced during the corresponding six months of 2025. Higher demand for poultry products, lower feed input costs, low levels of electricity disruption in South Africa and continued recovery following the effects of avian influenza in prior years supported the improvement. “The demand for poultry products was supported by an outbreak of foot-and-mouth disease in South Africa that resulted in reduced red meat supply,” it said.It said the last avian flu outbreak reported in South Africa was in November 2025, affecting a KwaZulu-Natal commercial broiler farm. Quantum was affected by an outbreak in early October 2025 at a Western Cape layer farm that affected about 153,000 hens.“The absence of further outbreaks during the current reporting period supported improved throughput, flock stability and cost recovery,” it said.Feed input costs declined materially during the reporting period, with the average Safex yellow maize price falling 30.6% as South African maize prices moved closer to export parity. The landed cost of soya bean meal decreased by 14.1%, mainly due to the stronger rand, it added. Wheat bran and hominy chop prices were down 24.7% and 19%, respectively compared to the prior year. However, in line with the company’s procurement and hedging practices, forward-priced raw material positions at the start of the current reporting period delayed the full realisation of the benefit of these lower feed raw material market prices. As a result, the average cost of broiler feed decreased by about 4.5% and the cost of layer feed decreased by about 9.2%.Trading conditions in the group’s other African operating countries generally improved. In Zambia, lower feed raw material costs and improved electricity supply stimulated demand for day-old chicks, feed and eggs, resulting in increased margins. In Mozambique, the previous reporting period was affected by unrest after the election in October 2024. During that period, the company experienced an incident at its layer farm where about 16% of birds were looted. The incident also disrupted bird health by interrupting the vaccination programme. Egg selling prices were lower during the current period. Ugandan poultry producers continued to experience favourable trading conditions, supported by stable feed costs and increased demand for day-old chicks and feed, it said.Egg selling prices in South Africa are expected to remain under pressure, as the national flock levels remain elevated. Changes in feed raw material costs directly affect earnings derived from the group’s egg business, it said. Earnings from the feeds and farming businesses are more resilient to changes in feed raw material costs, as changes in input costs generally drive selling price adjustments in these businesses.The risk of avian flu outbreaks remains high, both locally and internationally, and continues to represent a significant operational risk to the poultry industry, Quantum said. Discussions between the industry and the South African government have not yet resulted in commercially feasible HPAI vaccination administration protocols for producers. In the absence of vaccination, HPAI will remain a key risk factor affecting poultry businesses going forward, resulting in major uncertainty that could severely affect earnings for the industry, Quantum said.The group continues to mitigate this risk through geographic diversification, biosecurity protocols and disciplined placement strategies. Elsewhere, the performance in Zambia is expected to remain stable. While Uganda was strong in the current reporting period, repeating this performance in the second half of the year will be challenging, with the expectation of higher feed input costs and disruption to planned hatching egg import logistics related to the ongoing conflict in the Middle East. The environment in Mozambique is expected to remain challenging during the second half, Quantum said, with egg selling prices continuing to be under pressure due to high layer flock numbers in South Africa.