Astral has reported an operating loss of R621 million for the financial year that ended in September, compared to a profit of R1.4 billion in 2022. The company is implementing various initiatives to “normalise the business post the load shedding disaster,” it said.
Astral’s poultry division swung into a loss of R1 380 million as operating profit dropped 272% from the R802 million profit the previous year. It is selling chickens at a loss as price increases have been insufficient to recover the rise in input costs.
Expenses in the division included the direct cost of load shedding (R1 622 million), water supply interruptions (R31 million), as well the outbreak of bird flu (R400 million). Feed prices were up 15% in the year, and feed represents 70% of cost of producing a chicken.
The company has spent nearly R400 million on emergency diesel generators and R168 million on additional water storage. Diesel to power the generators is costing Astral R540 million a year.
Chicken prices increases of 8.2% were “well below levels that were required to recover higher input costs and extraordinary expenses due to load shedding and generator operational expenses,” Astral said. The result was a negative net profit margin of -9.7% for the year, compared to a positive 3.5% in 2022.
Astral will focus on rebuilding its balance sheet in the 2024 financial year, which it considers key to providing resilience through the cyclical nature of the poultry sector in South Africa. It said load shedding “continues unabated” although at a lower level in recent months.
“Bird flu remains a major risk to the local poultry industry, however progress is being made towards approvals for voluntary vaccination of broiler breeding stock,” the company said.