Part 6 of 9 · Testing the plan
Five-Year Projections and Sensitivity Analysis
Profit arrives only in Year 3, once the houses are full. And a 10% move in selling price changes annual EBITDA by more than any cost-side variable.
The projection assumes a realistic capacity ramp. New broiler operations rarely fill every house from the first cycle: chick supply, customer acquisition and staff learning all take time. This model assumes 70% of capacity in Year 1, 90% in Year 2 and full production from Year 3.
EBITDA margin moves from 4.4% in Year 1 to 14.8% in Year 3 as fixed costs are spread across more birds.
| R | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Capacity utilisation | 70% | 90% | 100% | 100% | 100% |
| Birds sold | 40 110 | 51 570 | 57 300 | 57 300 | 57 300 |
| Revenue | 3 552 780 | 4 819 092 | 5 649 047 | 5 959 745 | 6 287 531 |
| Feed | (1 100 440) | (1 502 572) | (1 773 035) | (1 882 963) | (1 999 706) |
| Other variable costs | (991 588) | (1 338 644) | (1 561 752) | (1 639 839) | (1 721 831) |
| Fixed cash costs | (1 304 000) | (1 388 800) | (1 477 840) | (1 571 332) | (1 669 499) |
| EBITDA | 156 752 | 589 076 | 836 421 | 865 610 | 896 494 |
| EBITDA margin | 4.4% | 12.2% | 14.8% | 14.5% | 14.3% |
| Depreciation | (392 000) | (392 000) | (392 000) | (392 000) | (392 000) |
| Finance costs | (439 632) | (400 041) | (355 501) | (305 394) | (249 023) |
| Net profit / (loss) | (674 880) | (202 965) | 88 919 | 168 216 | 255 471 |
| Cost per saleable bird | R94.44 | R89.63 | R90.83 | R95.74 | R100.93 |
| Selling price per bird | R88.00 | R92.84 | R97.95 | R103.33 | R109.02 |
| Debt service cover | 0.21x | 0.78x | 1.11x | 1.14x | 1.19x |
Section 5.2Broiler farming profitability: what the numbers actually show
This is the finding that most surprises first-time entrants. Producing more birds does not automatically produce more profit — the birds must be sold at a price above R81.76 each.
If you are working out how to start a broiler farming business, the sequence that follows from these numbers is: secure the customers first, size the houses to the confirmed demand, and only then raise the capital. Building capacity before demand is what turns a viable broiler farm into a loss-making one.
Section 5.3Where every rand of revenue goes
Section 5.4Sensitivity analysis: what actually moves poultry profit
Base case EBITDA is R782 788. Selling price has roughly twice the impact of feed price.
Two findings deserve attention. First, selling price dominates — which means your market section and your customer contracts matter more to profitability than any production improvement you can make. Second, live weight is the second largest lever, because an extra 0.15 kg per bird adds revenue across every bird sold while adding only the feed to produce it.
How much feed price can the farm absorb?
The worked example assumes feed at R7.20/kg and remains profitable up to about R10.79/kg — headroom of roughly 50%. On the revenue side, the farm breaks even at a selling price of about R33.79/kg against a planned R40.00/kg. Stating both of these figures in your plan demonstrates that you know where the cliff edges are.
