Chicken Industry

Astral expects a 60% drop in earnings

Johannesburg – Listed poultry producer Astral Foods expects headline earnings per share for the six months ended March 31 to fall by up to 60 percent, which translates to a dip in earnings from 774 cents a share in the corresponding period last year to 310c a share.


This is an improvement to the guidance Astral gave on February 6 when the company said it expected headline earnings a share and earnings a share to fall by more than 75 percent, compared to the corresponding period last year.


At the time, Astral attributed the expected drop in earnings to weakened consumer spending, lower kilograms sold mainly because of the new brining regulations, high maize meal prices and high levels of imported poultry.


But in a trading statement on Monday, Astral said it expected the interim results for the six months to March 31 to be better. It attributed the improvement to planned poultry production cutbacks during the second quarter in order to avoid prolonged overstock conditions, and the adjustment in selling prices to offset the impact of the newly legislated brining levels of individually quick frozen products was successfully implemented and sustained throughout the period.




Astral announced in February that it had introduced planned production cutbacks in order to alleviate the pressure on the overstocked poultry levels.


Astral has been on the receiving end of the influx of chicken imports. In the 2016 financial year, Astral came under pressure from imports which reached record levels of poultry imports equivalent to 43percent of local production.


Chief executive Chris Schutte said, in the company’s latest annual report, that the flood of poultry imports into South Africa had increased by 20 percent in the year to end of September, compared to the corresponding period in 2015.


“This included a further increase in imports from the EU, and on the back of a weakening local currency points to classic dumping of bone-in portions. Total poultry imports peaked at an unprecedented 57673 tons in March 2016, the equivalent of 10.3million birds a week or approximately 55 percent of local production,” said Schutte.


The Food and Allied Workers Union (Fawu) earlier this month told Parliament that South Africa should start a “trade war” with the EU to save the South African poultry industry. Fawu general secretary Katishi Masemola said the EU was selling breast portions to its member countries at premium prices, while dumping leg quarters in South Africa at low prices.


Astral is expected to release interim results on May 15.

This article by Siseko Njobeni appeared in IOL Business Report on 05 April 2017