Ahead of the presentation of the fiscal year results due next month, Astral Foods is warning shareholders that earnings per share (EPS) could be as much as 60% lower for this financial year than it was for the previous 12 months.
Among the factors that have adversely impacted profitability this year, the firm cites higher prices for the key feed ingredient, corn, and a lackluster domestic market for poultry meat. The situation has been exacerbated in the first case by comparison with unusually low corn prices in the previous year. Furthermore, chicken prices in South Africa have been falling as the result of a high level of poultry meat imports, according to the company.
Astral Foods has also been negatively impacted by industrial action at its facilities in KwaZulu-Natal during the first 3 months of the year, as well as disruption to the power supply in the second quarter, and more recently to the water supply to its Standerton factory in the province of Mpumalanga.
Astral Foods’ announcement of deteriorating financial results was not unexpected. Reporting its six-month results in May 2019, Astral Foods recorded a drop in operating profit of 51%.
Three months ago, an ammonia leak at the company’s poultry processing plant in Olifantsfontein in Gauteng province led to the hospitalization of 15 workers, reported Business Day. No-one died in the incident, but the area was evacuated and an investigation into the cause of the leak was underway.
In one piece of positive news released in a separate statement last week, Astral Foods said that the firm’s CEO, Chris Schutte, has returned to work, and resumed all his previous responsibilities, reported the same source. The executive had temporarily stepped aside in August due to ill-health.
With its estimated annual production of 1.48 million metric tons of feed from 7 mills in South Africa, Astral Foods made it into the recent Feed Strategy Top 102 World Feed Companies rankings.
In the latest Poultry International Top Poultry Companies database, Astral Foods heads the list of African firms, with annual production of 272 million birds from 3 slaughter plants.
According to the firm’s own web site, Astral Foods is among the largest integrated poultry companies in South Africa. Its main activities are in animal feed premixes, broiler genetics, sale of day-old chicks, and the production and distribution of a range of fresh, frozen, and value-added chicken products.
