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March 18, 2021

South Africa’s Astral Foods issues profit warning related to Covid-19

South African poultry processor Astral Foods continues to struggle with the impact on its results from the Covid-19 pandemic

By Dean Best

South African poultry processor Astral Foods continues to struggle with the impact from the Covid-19 pandemic and has issued a profit warning for its first-half results.

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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
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Earnings per share and headline earnings per share are both likely to be down by a maximum of 45% in the six months to 31 March from the corresponding period a year earlier, when Astral reported 951 South African cents per share for each of those metrics. The end results for the current reporting period are expected to be at least 523 cents, Astral Foods said in a stock-exchange filing. 

The company, which produces fresh, frozen and value-added chicken products under brands such as Festive, County Fair and Mountain Valley, added the final results will be issued around 17 May.

Astral said in the filing that first-half results (October 2019 through March 2020) in its last fiscal year were not affected by Covid-19, but it then went on to issue a profit warning last September for the full-year – when the virus was fully established around the world – citing costs related to coronavirus and depressed chicken prices.

In its latest filing, Astral said: “The impact of the Covid-19-related lockdown on the economy, and constrained consumer spending has remained evident through the interim period. In addition, Astral’s poultry operations have not been able to recover significant increases in feed costs in the selling price of poultry products during this reporting period.”

For the previous full fiscal year ended 30 September 2020, Astral reported a 4.6% increase in revenues to ZAR14.1bn (US$960.7m) – with poultry contributing 79% – but net profit was down 13.3% at ZAR561.2m.

Profit before tax was 14.3% lower at ZAR781.8m. Headline earnings per share fell 14% to 1,441 cents, while earnings per share were down 13% at 1,435.

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What’s the forecast for the food and grocery industry?

The food and grocery sector thrived during the pandemic, largely due to the shutdown of the food service industry and the sector’s subsequent necessity, panic-induced bulk purchasing, and spending more time at home. The market has grown as a result of inflation. Consumer unwillingness to go out and socialize, and the reopening of several hospitality facilities, helped maintain the demand for groceries, particularly online, in 2021. As consumer behavior changes, we consume more food and drink at home, and inflation increases basket sizes. GlobalData predicts that the sector will continue to hold a higher share than had been predicted prior to the pandemic. This is true despite the fact that the food and grocery sector's share of overall retail will decline from its peak in 2020. This report will discuss market forecasts and key themes in the global food & grocery industry in 2022 and beyond. It covers:
  • Market drivers and inhibitors
  • Five-year forecasts and the impact of COVID-19
  • The performance of the online channel versus offline
  • Major trends in the market including rapid delivery, ambient retailing, supply chain disruption, and inflation
Assess developments within this sector to help your business thrive in 2022 and beyond.
by GlobalData
Enter your details here to receive your free Report.

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