South African poultry major Astral Foods, which posted its first annual loss in last financial year, has said it has made “good headway” in addressing a number of the issues it faced.
In November, Astral Foods, after recording an annual loss of R512.2m (then $27.8m) for the 12 months to the end of September, told analysts of its plans for recovery from “the lowest point in Astral Foods’ proud history”.
The business, which like its local peers was buffeted by headwinds last year including power outages, or load-shedding, bird flu and high feed costs, suggested in a stock exchange statement today (31 January) that its plan to re-build its balance sheet is bearing fruit. It expects that EPS and HEPS (headline earnings per share) for the six months ending 31 March 2024 could increase by at least 300% compared to the comparative period last year to 647 cents and 654 cents respectively.
Its recovery programme is centred on what the company describes as Project 3R – to re-set, re-focus and re-start the business. Without providing details, Astral Foods said in November its plans revolved around “various initiatives to normalise the business post the load-shedding disaster”.
Today, issuing a voluntary update following last year’s “devastating set of results”, it said: “For the first quarter of the financial year ending 30 September 2024, Astral has made good headway in addressing a number of issues faced by the group in the prior reporting period.
“This includes maintaining emergency backup generator capacity at all its operations.”
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It said fewer “load-shedding stages” have allowed it to contain diesel expenses to below those anticipated, although it said a significant diesel cost is still being incurred to operate the Standerton poultry processing plant due to municipal power supply interruptions.
Astral Foods also pointed to lower feeding costs being achieved as a result of a normalised broiler age and live weight, resulting in an improved feed conversion rate following the ‘big bird era’, supported by easing local soft commodity input prices.
And it said it averted a potential shortage of chicken as a result of bird flu, through a “costly programme” of importing broiler hatching eggs.
However, Astral Foods cautioned internal feed volumes will negatively impact the feed division’s financial performance for the six months ending 31 March 2024 before normalising during the second half of FY2024.
Commenting on its poultry division, the company said amid depressed consumer spending it has aligned broiler slaughter numbers to adapt to current market conditions, and “remains committed to recovering input costs”.
Astral Foods said its poultry division has posted a marginal level of profitability in Q1, 2024.
But the company said it is “dismayed” at a poultry import tariff rebate structure recommended by the International Trade Administration Commission (ITAC) against shortages as no shortage of chicken has been experienced or expected in the local supply chain with industry production at normalised levels due to numerous contingency plans implemented.
A further trading statement will be provided in April.