South African company Astral Foods reported a 51 percent drop in operating profit for the six-month period ending March 31.
While the company’s profit increased for its feed division, its poultry division saw a sharp decline in operating profit for the period.
Poultry division
Astral Foods’ poultry division reported an operating profit of ZAR258 million (US$18.1 million), a 68.9 percent decrease when compared to the same six-month period on a year-over-year basis.
Higher feed costs, lower selling prices, a newly legislated minimum wage, competition from less expensive imports and water supply interruptions were all attributed to the division’s struggles.
“The increase in feed prices could not be recovered in the selling prices of chicken in the consumer marketplace,” Chris Schutte, CEO of Astral Foods, said in a press release. “I have on numerous occasions expressed a concern about the financial health of the South African consumer, given the dire economic environment.”
Schutte also criticized the current trade situation.
“Long-term investments in local chicken production will be hampered, should poultry imports and dumping continue unabated,” said Schutte. “Whilst South Africa is in urgent need of economic growth and the populace is desperately crying out for jobs, the lackluster and ignorant approach to South Africa’s liberal trade barriers is harming our people. Poultry production is just one of many industries that have the potential to create local and rural jobs.”
Feed division
Astral Foods reported an operating profit of ZAR239 million (US$16.7 million) for the six month period, a 24.6 percent increase on a year-over-year basis.
The division benefited from well-controlled expenses and effective raw material cost recovery, the company stated.
It also gained from higher feed selling prices, despite a slightly lower decrease in sales.
According to the Feed Strategy Top Companies survey, Astral Foods produces just shy of 1.4 million metric tons of feed annually.
