SOUTH AFRICA – Astral Foods Limited (Astral), South Africa’s leading integrated poultry producer is expecting its operating profit to be down by not more than 15% for the year ending 30th September 2020.
The group indicated that the earnings per share (“EPS”) and headline earnings per share (“HEPS”) for the period are expected to be also down by not more than 25% on the comparative previous year’s reported results.
Astral Foods reported Heps of 1 674 cents a share and EPS of 1 659 cents last year. However, in the current financial year the group expected its EPS to be at least 1 244c and Heps to be at least 1 255c.
The performance has been dented by costs to manage Covid-19 risks and a shutdown in fast food outlets during the hard lock down.
Despite the tough conditions, Chris Schutte CEO of Astral indicated that the business had performed satisfactorily in striving for operational excellence and executing its cost strategy as it ran its operations with no serious production interruptions.
“Astral is cautiously satisfied with its performance considering that the entire second half of the financial year was negatively impacted by the lockdown associated with the Covid-19 pandemic, which appears to have had a more severe impact on the financial results of other businesses within this sector,” said Schutte.
The financial year also includes water supply costs incurred at the group’s poultry processing plant in Standerton.
Countrywide and localised load shedding in Standerton, plus additional costs to manage the risks associated with Covid-19 and ensuring the safety of its staff, will also affect the financial results for the year.
The pilling costs are believed to be 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.
Other than high costs, a complete shutdown in the quick service restaurant (QSR) sector during the hard lockdown saw more chicken being channelled to frozen production, resulting in higher stock levels of individually quick frozen (IQF) portions in the poultry industry.
This resulted in downward pressure on selling prices to the retail market. Consumer spending patterns have come under strain as economic conditions in the country have worsened.
The profitability of Astral’s broiler operations in particular, were negatively affected, whilst the feed division remained unaffected.
Astral’s CEO hospitalized
In other related news, the poultry producer announced that its chief executive, Chris Schutte, had an accident on Saturday, 19 September 2020, during a motorcycle trip in celebration of his upcoming 60th birthday whilst on leave.
At this stage, the recovery period was unknown and as in previous cases, Astral’s competent executive management team is in place to deal with all relevant operational matters and Daan Ferreira, Astral’s Chief Financial Officer, will be the central contact person during Chris’ absence.
“Astral’s Board extends its best wishes to Chris Schutte and his family during this time, and requests that all communication in this regard be addressed via the Astral Corporate Office. Chris Schutte’s return to office will be communicated at an appropriate time,” stated the company.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. SUBSCRIBE HERE