Astral warns of profit slump as poultry farmers face mounting challenges

The huge slump in profits at Astral Foods, South Africa’s biggest poultry producer, shows the extent of the challenges faced by the country’s chicken farmers.

Astral warned that, when it announces results later this month for the first half of its financial year, profits would be down by between 87% and 92% compared to the same period last year.

The reasons for the slump have not changed since an earlier statement outlined the problems.

It said then that it was having to deal with “record high feed input costs, devastating levels of load shedding and the general decay of municipal infrastructure”.  

Load shedding – the daily power cuts that have disrupted South African businesses this year – had led to abnormal additional costs and production cutbacks. Astral has made huge investments in diesel generators and is spending R1 million a day to power them. The result, it said, was that Astral was subsidising consumers by R2 per kg because production costs exceeded the selling price.

The full reality will be spelled out in greater detail on 22 May when Astral makes its results presentation.