Astral Foods issues profit warning

South African poultry company Astral Foods has warned that shareholder earnings will be substantially lower for the current year.

Phongphan |
Phongphan |

South African poultry company Astral Foods has warned that shareholder earnings will be substantially lower for the current year.

Additional costs to manage the risk of coronavirus (COVID-19) and to keep its workforce safe underlie the latest shareholder warning.

According to Astral Foods Limited, earnings per share (EPS) and headline earnings per share (HEPS) are forecast to be down as much as 25% for the current financial year compared to 12 months previously. For the 2020 fiscal year ending September 30, EPS and HEPS are expected to be a minimum of 12.44 rand (ZAR; US$0.75) and ZAR12.55, respectively. These figures compare with ZAR16.59 and ZAR16.74, respectively, for the previous year.

As well as the direct costs linked to the pandemic, changes to the poultry meat market put downward pressure on market prices, the company reports. As the quick service restaurant (QSR) sector shut down at the start of the national lockdown, more poultry meat was processed into individually quick frozen (IQF) products. As stock levels rose, selling prices to retail and consumers slumped.

Commenting on the latest announcement, the CEO of Astral Foods highlighted the company’s satisfactory performance considering the challenges of the pandemic.

“Astral is cautiously satisfied with its performance considering that the entire second half of the financial year was negatively impacted 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,” said CEO Chris Schutte.

Despite these challenges, Astral expects its operating profit for the year to be no more than 15% lower than for 2019. According to the firm’s audited results, profit before interest and tax stood at just under ZAR882.3 million for the year ended September 30, 2019.

More on Astral Foods

With annual slaughterings of 272 million chickens, Astral Foods is the largest poultry meat producer in Africa, according to the Top Companies database.

A vertically integrated poultry producer, Astral Foods has a number of South African subsidiaries, including National Chicks, County Fair, Ross Poultry, Tiger Chicks, Tiger Animal Feeds, and Provimi. It is also the largest producer of broiler chicks in South Africa, and has poultry operations in Mozambique, Swaziland and Zambia.

In addition to the sale and distribution of key poultry brands, Astral Foods identifies its key activities as animal feed pre-mixes, manufacturing of animal feeds, broiler genetics, production and sale of day-old chicks and hatching eggs, with integrated breeder and broiler production operations, and slaughterhouses.

In October of last year, a series of adverse business factors were blamed by Astral Foods for a likely fall in shareholder earnings in 2019.

View our continuing coverage of the coronavirus/COVID-19 pandemic.

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