Astral Foods expects its half year profit to nearly half impaired by COVID-19, high feed costs

SOUTH AFRICA – Astral Foods Limited (Astral), South Africa’s leading integrated poultry producer has warned of a sharp fall in profits for its six months to end-March, as the owner of Goldi Chicken and County Fair brands struggles to recover increases in feed costs due to constrained consumer spending.

The JSE listed company said in a trading update that headline earnings per share is expected to fall by no more than 45% on the comparative previous interim period’s results of 951 cents per share, coming in at least 523c per share.

“The trading results for the interim period are compared to results in respect of the comparative previous interim period for the six months to end-March 2020, which was not affected by the impact of Covid-19 at the time.

“The impact of the Covid-19 related lockdown on the economy, and constrained consumer spending has remained evident through the interim period,” the group said.

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Although last year’s numbers were not negatively impacted by the Covid19 outbreak, the group incurred additional costs that were associated with load shedding, the legislated national minimum wage and on-going water supply costs relating to the Standerton contingency measures, reports IoL.

The group’s earnings in the comparative period last year were boosted by the performance of its poultry divisions, which increased its operating profit 11.5 percent to R287 million (US$19.21m).

The feeds division’s operating profit was marginally up by 1.7 percent, while the other Africa division’s operating profit increased to R16m (US$1.07m) from R7m (US$468,500) a year earlier.

Group operating profit was up 8.5 percent to R546m (US$36.5m).

It is expected that the results for the six months ending 31 March 2021 will be published on or about 17 May 2021.

Meanwhile, South Africa’s poultry meat production is projected to rise by 4% in 2021 to reach 1.57 million tons from 1.51 million tons in 2020.

This was revealed by a GAIN report by USDA attributing the rise to the success of the recently launched Poultry Sector Master plan, hinge on increasing local chicken production and consumption, while also addressing the exporting of locally produced and raw chicken products.

One of the measures used to accomplish the objective is increased import tariffs.

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To this end the International Trade Administration Commission approved the South African Poultry Association’s (SAPA) application to increases the most favoured nation duties (MFN) on imports of bone-in chicken from 37 percent to 62 percent, and for boneless portions from 12 percent to 42 percent which was effected as of March 13, 2020.

With the new tariffs put in place and rise in production, it is forecasted that the country’s chicken meat imports will decrease by 10 percent in 2020 to 435,000 tons from the 539,000 tons imported in 2019 and further reduce to 357,000 tons in 2021, an 18% reduction.

On the other hand, it is projected that 2021 poultry exports will increase marginally to 51,000 tons.

To drive exports, the poultry industry has strategically prioritised countries like Saudi Arabia, United Arab Emirates and Qatar for export of poultry products.

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