SOUTH AFRICA – Astral Foods, a leading integrated poultry producer has announced plans to invest in plant expansion with more than US$104 million in capital expenditure for the next three years to improve capacity and efficiencies, according to Business Report.
Astral CEO Chris Schutte revealed the plans after reporting improved results, a 15% rise in revenues for the six months ended March despite a challenge with the avian influenza.
The company said it was committed in boosting production and operational efficiencies for its poultry business to enhance on its overall capacity by 20-25%.
Chris said US$68.28 million was earmarked for a first-phase production expansion at its Festive chicken plant in Olifantsfontein that will see an additional 400,000 birds produced per week.
In the second phase of expansion, the company would spend US$15.3 million that will add 400,000 more birds per week.
Though he did not rule out possibility for acquisitions to boost capacity, he gave no credence to it, instead said Astral envisaged a further investment worth US$16.12 million in increasing capacity at the Mountain Valley plant in KwaZulu-Natal to boost production by 200,000 birds per week.
“If we regard ourselves as the lowest-cost poultry producer, why should we look elsewhere for opportunities when we can do it better in-house?” he said.
According to Ron Klipin, an analyst at Cratos Wealth, Astral’s capital expenditure plans should enable the company to keep or increase market share.
“This should enable the group to keep and/or increase market share. The increased capex investment should help increase market share from 27 percent to 31 percent, with major demand by groups such as Nandos looking to diversify its source of chicken supply,” Klipin said.
In the interim results report, the company indicated that business was improved due to favourable trading conditions and they forecast continued business confidence and more direct foreign investment.