The continuing unfavourable trading environment is expected to push the earnings of JSE-listed Astral Foods down by up to 75% for the six months to March 31.
Emerging from a muted first quarter, the negative impacts of weakened consumer spending, high levels of imported poultry, high maize and soya meal prices, lower kilograms sold and planned production cutbacks had spilled over into the second quarter.
Earnings per share (EPS) and headline earnings per share (HEPS) of 94c are expected for the six-month period under review, a significant decline on the EPS of 777c and HEPS of 774c reported in the prior corresponding period the year before.
“The operating profit for the first quarter was 70% lower than in the corresponding period. This decline was expected . . . and indications are that trading conditions that gave rise to this lower profitability will continue well into 2017,” the company said in a trading update to shareholders on Monday.
Astral highlighted the negative impacts of new brining regulations in the poultry industry, leading to lower kilograms sold, the high maize and soya meal prices, which will continue until the new harvest season starts in May and the continuously high levels of imported poultry not under the International Trade Administration Commission of South Africa safeguard duty.
Astral had also introduced planned production cutbacks to alleviate the pressure on the overstocked poultry levels, it said in the update.
The group will release its interim results on May 15.