Astral Foods’ earnings down 13% despite 5% rise in revenue

SOUTH AFRICA – Astral Foods Limited (Astral), South Africa’s leading integrated poultry producer has reported a 5% rise in revenue to R 14.1 billion (US$916.96m) in the year ended 30th September 2020 from R13.5 billion (US$877.94m) in 2019.

Despite of this, the chicken producer’s profit has fallen by 13% to R561 million (US$36.4m) from R638 million (US$41.49m) in 2019, as the poultry industry continues to battle with the impact of Covid-19 and higher feed costs.

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Its Earnings per share decrease down 13%, Headline earnings per share decline by 14% while operating profit dropped by 5%.

This is within the group’s expected earning range as indicated in its September trading update, which foresaw the period’s EPS and HEPS going down by not more than 25% on the comparative previous year’s results and operating profit to be down by not more than 15%.

Astral Foods reported Heps of 1 674 cents a share and EPS of 1 659 cents last year.

The company attributes the drop in earnings to the negative impact South Africa’s lockdown had on its second half which led to the closure of hospitality and quick service restaurant sectors.

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“Poultry producers that supply these markets were found overnight with surplus chicken and, as a result, had to channel this excess into various frozen categories.

“The resulting oversupply led to a stock build in the industry and later culminated in aggressive price cutting in the market to clear these stock levels,” said the company.

The impact of Covid-19 added to the higher feed costs for poultry producers, due to a combination of the weakening of the rand, weather concerns in the international grain markets, higher global coarse grain prices and an increase in demand from China.

Astral Foods Earnings per share decrease down 13% while Headline earnings per share decline by 14%.

The group also saw had operational challenges due to load shedding and municipal infrastructure issues, including water shortages at its Meadow Feeds facility in Standerton, Mpumalanga.

The pilling costs are believed to have been partially offset by the continued good performance of the Ross poultry breed, where Astral was once again able to optimise the genetic potential of the bird.

“We continued to execute our simple yet resilient strategy, which once again assisted the group in navigating through new challenges brought on by the Covid-19 pandemic. Astral can proudly report satisfactory results, with all its integrated operations continuing to run like clockwork during South Africa’s hard lockdown,” said Chris Schutte, CEO of Astral.

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