Johannesburg, 04 April 2024 : Daybreak Farms Pty Ltd, a leading South African poultry producer, is planning a R250-million ($13 million) debt deal to stabilise the company and further optimise its operations and balance sheet. This deal follows the recent and successful restructuring programme and the appointment of the new C-suite.

Led by Richard Manzini, Daybreak Farms underwent a restructuring process in 2023 and recently announced the new C-suite team to support the continued growth plans of the company’s operations.

The company currently holds about R1.2-billion in assets and was acquired by the Public Investment Corporation in 2015. Richard Manzini, previously from PIC, was appointed in January 2024, having overseen  the turnaround of Daybreak Farms in his capacity as a board member prior to his appointment.

Despite the challenges the poultry industry faced in 2023, Daybreak Farms is now tracking in accordance to industry margins towards profitability. The fundamental reason is that the company has ensured the strengthening of corporate governance.

Manzini took a hard stance and from July 2023, his focus was on getting financial controls in place. Daybreak succeeded, and during the Avian Flu Pandemic, the company managed their cash much more stringently without access to a revolving facility or support from the shareholder. This moves lent credence to the fundamental stacking of the business, the cost efficiencies realised and the treasury management.

“We need about 18 months to sort out the balance sheet, starting with raising the R250-million in loans,” says Manzini.

South Africa is the biggest producer of chicken in Africa, producing close to two million tons of chicken a year, and is ripe for consolidation and deal activity. Daybreak holds approximately 7% of the South African chicken market currently, and steady growth is expected.

The cash raised will be used for technology upgrades of Daybreak’s abattoirs and machines, a water treatment plant, and increasing the speed of the chicken processing systems added Manzini. Daybreak Farms supplies its own and contracted broiler farms with day-old chicks, which are raised and sold as fresh and frozen whole chickens and portions.

Manzini said with the power cuts in recent years, fresh chicken portions have become more popular. “We are planning to tilt one of our abattoirs to focus more on fresh product mix, and we are also in talks with a broader client base,” said Manzini. The plan is to take processing from 1.5 million chickens a week to about 1.9 million chickens a week in the next few months,” he said.

The capex of the business is off at the moment with costs, maintenance and repairs up at about 30% - essential to the company’s  turnaround - is to bring these costs down.

This initial debt deal and the restructuring of the company and its balance sheet could result in an additional investment round to build out its strategic direction as a protein foods business.

 “The mission is to get Daybreak, which employs 3 400 people, back to a strong market position, where it deserves to play,” said Manzini.