Share earnings forecast down for Astral Foods

South African poultry company Astral Foods is forecasting a significant drop in share earnings for the current financial year. However, a recent report on the country’s poultry sector forecasts an improving situation for the coming year.

(Yurii Bukhanovskyi | Bigstock)
(Yurii Bukhanovskyi | Bigstock)

South African poultry company Astral Foods is forecasting a significant drop in share earnings for the current financial year. However, a recent report on the country’s poultry sector forecasts an improving situation for the coming year.

For the current financial year, earnings per share (EPS) and headline earnings per share (HEPS) for Astral Foods are expected to be down compared to last year. The reduction is not expected to be more than 25% for the period, which ends on September 30.

According to the latest trading announcement, EPS will be no less than 10.76 rand (ZAR; around US$0.73), and HEPS at least ZAR10.81. The comparative figures for the 2020 financial year were ZAR14.35 and ZAR14.41, respectively.

As this information has not been reviewed by the firm’s auditors, a further statement will be issued when the situation is more certain.

Astral reports lower profit on higher revenue for first half-year

Headline figures for the first half-year ending March 30 put operating profit for Astral Foods down 37% year-on-year. Profit before interest and tax was reported as almost ZAR344.7 million. 

This was despite a 7% rise in revenue compared to same period in 2020 to ZAR7.544 billion. However, profitability was impacted by higher sales costs. This rose to almost ZAR6.166 billion from ZAR5.530 billion for the comparable period in 2020.

After tax, the firm’s reported profit for the first six months of 2021 was ZAR319.4 million — down from ZAR519.2 million the previous year.

Among the adverse factors impacting the firm’s results was civil unrest in South Africa earlier this year. In July, Astral Foods estimated the costs of rioting and looting at ZAR16 million. The action disrupted deliveries of feed, which led to the culling of 44,000 breeding chickens. Furthermore, some outlets of its retail customers had to close, or were damaged. One of the company’s own sites was put out of operation for several days. 

Positive outlook for South Africa’s poultry sector

By 2022, domestic chicken meat production will have returned to growth, according to the latest forecast from the USDA Foreign Agricultural Service (FAS). It expects feed costs to decrease, and sector investment to stimulate expansion in output.

Compared with 1.51 million metric tons (mmt) in 2020, this source is forecasting South African chicken meat production at almost 1.53mmt and 1.60mmt in 2021 and 2022, respectively. 

With South African beef prices expected to remain high, more poultry meat will be consumed as the country’s forecast economic recovery comes into effect, according to FAS. Following a drop from 1.89mmt in 2020 to an estimated 1.87mmt this year, domestic chicken meat consumption is forecast to reach 1.93mmt in the 2022 calendar year.  

Meanwhile, increased tariffs and a national plan to protect the domestic poultry industry are forecast to reduce South African imports of chicken meat. At the same time, FAS expects a lifting of restrictions imposed as a result of earlier highly pathogenic avian influenza outbreaks in South Africa to help poultry meat exports to recover. 

More on Astral Foods

Earlier this month, Gary Arnold was appointed the company’s chief operating officer.

With annual slaughterings of 260 million birds, Astral Foods is the leading poultry producer in South Africa and on the African continent, according to WATTPoultry.com’s Top Poultry Companies database.

An integrated producer, Astral Foods operates several subsidiaries producing feed premixes, animal feeds, breeder chickens, hatching eggs and day-old chicks. Its integrated breeder and broiler production operations, abattoirs and several poultry brands operate not only in South Africa, but also in Mozambique, Eswatini (formerly Swaziland), and Zambia. 

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