Astral Foods Limited (Astral), South Africa’s leading integrated poultry producer, recently released a trading update on the Stock Exchange News Service (SENS). The group indicated that the earnings per share and headline earnings per share for the year ending 30 September 2020 are expected to be down by no more than 25% on the comparative previous year’s reported results.
Chris Schutte, CEO of Astral, commented: “Astral is cautiously satisfied with its performance considering that the entire second half of the financial year was negatively affected by the lockdown associated with the COVID-19 pandemic, which appears to have had a more severe impact on the financial results of other businesses within this sector.”
Tough operating conditions
In addition, the financial year includes water supply costs incurred at the group’s poultry processing facility in Standerton. Countrywide and localised load shedding in Standerton, plus additional costs to manage the risks associated with COVID-19 and ensuring the safety of staff, have negatively affected financial results for the year.
This was partially offset by the continued good performance of the Ross poultry breed, where Astral was once again able to optimise the birds’ genetic potential.
Complete shutdown in the quick-service restaurant sector during the hard lockdown saw more chicken being channelled to frozen production, resulting in higher stock levels of individually quick-frozen portions in the poultry industry.
Consequently, this resulted in downward pressure on selling prices to the retail market. Consumer spending patterns have come under strain as economic conditions in the country have worsened.
Astral remains resilient to market conditions
The profitability of Astral’s broiler operations was particularly affected negatively, while the feed division remained unaffected.
“Under these conditions the business has performed satisfactorily, and the operating profit is expected to be down by no more than 15%. In striving for operational excellence and executing our simple best cost strategy, Astral has remained resilient to the market conditions during this period.
“We are pleased to say that during the COVID-19 lockdown our operations ran like clockwork with no serious production interruptions. We salute our staff at all levels in the business who have continued to support Astral in delivering an essential service to the country,” concluded Schutte. – Press release, Astral