Chicken Industry

Astral results: expect both good news and bad news

South Africa’s largest poultry producer, Astral Foods, had “an overall mixed performance” for the 2022 financial year, Business Day reported this week.

The newspaper was looking forward to Astral’s financial year-end results announcement, expected on 21 November, and recalling the group’s trading update published on 27 October.

Business Day said Astral’s capital investments into poultry production and processing capacity had bolstered sales, but the group was simultaneously adversely affected by the SA economy and poultry consumption patterns.

It reported that Astral’s share price had climbed more than 5.5% since the beginning of the year, but has fallen by more than 11% over the past five years.

Astral’s trading update – a brief market advisory about the results announcement later this month – said earnings per share were expected the be between 118% and 128% above the previous financial year, which ended on 30 September 2021.

The good news on improved sales and poultry margins was tempered by two factors. Firstly Astral noted that the earnings growth was “measured against a low base in the prior comparable year that was severely impacted by COVID-19 related lockdowns that adversely affected the South African economy and poultry consumption patterns.”

Secondly, it warned that the next six months – to end March 2023 – would be negatively impacted by a number of factors. These included extraordinarily high feed input costs, with maize trading at record highs and prices expected to remain elevated deep into the next financial year, and that Astral could not fully recover these high costs by raising selling prices.

Astral was currently “subsidising” the record high input costs in poultry selling prices to both its customer base and the consumer, it said. “This scenario cannot be sustained and will unfortunately lead to further poultry selling price inflation.”

In addition, Astral’s production was affected by Eskom’s rolling electricity outages and by water supply disruptions. Continued poultry dumping and the delay in implementing anti-dumping duties would also have a negative bearing on the outlook for the 2023 financial year, it said.

There will be a lot of interest when this is all explained in full later this month.