SOUTH AFRICA – JSE-listed poultry producer Astral Foods CEO, Chris Schutte, has revealed that the company has returned to profitability during the first quarter of the current financial year, marking a significant recovery from its first full-year loss in 23 years during the 2023 financial year.

Schutte expressed concern over the poultry import tariff rebate structure recommended by the International Trade Administration Commission of South Africa (Itac) in the face of highly pathogenic avian influenza (HPAI)-related shortages.

Despite this, he emphasized that there is currently no shortage of chicken in the market, and the local supply chain is expected to remain robust due to the industry’s production normalization.

The CEO highlighted the company’s sound financial position and decreasing gearing levels.

Astral anticipates a substantial increase in earnings per share for the six months ending March 31, projecting a 300% rise to 647c, and a similar increase in headline earnings per share (HEPS) to 654c, compared to the 2023 interim figures of 162c and 163c per share, respectively.

Astral faced multiple challenges in the 2023 financial period, including additional costs related to load shedding, water supply disruptions, record-high raw material inputs, and the impact of HPAI, which significantly impacted earnings.

During the first quarter of the 2024 financial year, Astral reported progress in overcoming challenges.

The company maintained emergency backup generator capacity at all operations, managing to contain diesel expenses below expectations, although the Standerton poultry processing plant still incurs significant costs due to municipal power supply interruptions.

Astral has implemented contingency plans to ensure uninterrupted water supply, albeit at a higher cost. Lower feeding costs were achieved through a normalized broiler age and live weight, resulting in an improved feed conversion rate.

Normalized poultry sales mix and consistent bird size further negated the need for high levels of promotional discounting.

The company is actively averting a potential chicken shortage due to bird flu by importing broiler-hatching eggs at a considerable cost.

Despite the impact of bird flu on broiler breeding stock, Astral’s Poultry division posted a marginal level of profitability in the first quarter.

However, the Feed division experienced lower internal feed sales, impacting financial performance for the first half of the fiscal year. External feed sales into the poultry industry were also limited due to the bird flu’s impact, particularly in the commercial layer sector.

Astral remains optimistic about normalizing internal feed volumes in the second half of the 2024 financial year, according to Schutte.

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