Among the highlights in the annual report of South African poultry and feed company Astral Foods are year-on-year increases of 102% in operating profit, and almost 22% in revenue.
For the year to September 30, 2022, Astral Foods reported revenue of 19.3 billion rand (ZAR; US$1.12 billion). This compares with the previous year’s figure of ZAR15.9 billion. The firm reports that ZAR2.8 billion of this improvement in revenue was the result of growth in the volume of broilers sold, as well as to a recovery in the selling price of these products.
From 4.6% in the previous year, operating margin has risen to 7.6%, Astral Foods reports. This is also mainly attributed to improved profitability by the Poultry Division, which rose from ZAR147 million a year ago to ZAR763 million for the 12 months just ended. Meanwhile, the Feed Division achieved an operating margin of ZAR599 million — a 13% increase compared with the previous year.
Astral Foods operates three divisions. In addition to Poultry and Feed in South Africa, the firm has two businesses in Zambia. There, Tiger Chicks produces day-old chicks for the local market and exports at its breeding farm and hatchery, and Tiger Animal Feeds has become one of Zambia’s leading animal feed suppliers, according to Astral Foods.
As a result of the past year’s performance, earnings per share in Astral Foods have been raised by 127%, and total dividend per share by 97%.
Poultry: revenue growth despite economic challenges
In South Africa, record unemployment and a weak economic state were among the challenges for Astral Food’s Poultry Division over the past year. However, the firm reports, it achieved higher chicken sales volumes as a result of strong retail promotion. Furthermore, there was growth in sales through quick-service restaurant (QSR) and fresh retail channels, which matched the company’s strategy to expand capacity for these types of products. These trends also helped improve the product mix, and secured supplies of chickens into the frozen market.
More expensive raw materials drove up broiler feed prices by 11.6% year-on-year for Astral’s Poultry Division. As a result, feed now accounts for 70% of the firm’s total cost of broiler production.
However, other costs have also risen from this business operation, particularly those related to ongoing power supply issues. Direct costs of load shedding are reported at ZAR126 million, water supply interruptions at ZAR9 million, and highly pathogenic avian influenza in its breeding operations at ZAR5 million.
Despite these issues, Astral Foods reports the operating profit margin for this Division at 4.8% — up from 1.1% for the previous fiscal year.
Feed Division raises prices in line with raw material costs
In its annual results, Astral Foods reports that a near-21% year-on-year increase in revenue for its Feed Division is attributable directly to higher raw material prices.
Overall, the volume of feed sold by the firm was 6.6% higher than in the previous year. Expansion in the company’s own broiler production raised internal sales of feed by 8.7%, while third-party sales were 3.4% higher year-on-year.
In contrast to its poultry business, Astral Foods reports a reduction compared to the previous 12 months in operating profit margin for its Feed Division. This amounted to 6.0% for the past year — down from 6.4% previously. Nevertheless, the company increased its margin per metric ton in Rand by 6.6%.
For the division, load shedding in the past year has cost the company ZAR12 million.
Selling prices, volumes higher for Other Africa Division
Comparing like-for-like operations, Astral reported an increase of 63% in revenue for its Other Africa Division at ZAR417 million. A result of both increased sales volumes and prices, the Zambian businesses achieved an operating profit of ZAR65 million — up from ZAR35 million in the year to September 2021.
In this review period, Astral Foods reports it sold its interests in the National Chicks Swaziland joint venture, and assets it had held in an operation in Mozambique.
More on Astral Foods
With annual slaughterings of 280 million birds, Astral Foods is by some margin Africa’s largest broiler producer, according to WATTPoultry.com’s Top Poultry Companies survey.
Earlier this year, Astral Foods formed an Environment, Social and Governance (ESG) Committee. This will focus on aspects of the firm’s sustainability including environmental stewardship, corporate governance, and accountable social engagement.
There seems to be no immediate end in sight to the electricity supply issues in South Africa.
Last week, leading supplier Eskom announced an immediate escalation in power cuts over the weekend. According to MyBroadband, the nation has suffered more power outages in 2022 than in any previous year. This peaked in the month of September, when load shedding was more intense than in the whole of 2020.
