Poultry producer Astral Foods reports that, despite challenges, its revenue increased by 13.9% year-on-year to R15.9-billion for the year ended September 30, with its poultry division contributing 81%, its feed division 17% and its other Africa division 2% of overall external revenue.
The higher revenue was primarily attributable to the broiler operations in the poultry division contributing R1.7-billion, which was the result of growth in broiler sales volumes, as well as a recovery in the selling price of poultry products.
Revenue for the poultry division increased by 15.3% to R13.1-billion, supported by higher sales volumes and a recovery in broiler sales realisations, together with improved sales of broiler parent stock into the external market by Ross Poultry Breeders.
Operating profit, however, decreased by 50.3%, to R147-million, with the broiler operations contributing R43-million.
Non-feed expenses in the poultry division increased year-on-year, negatively impacted by the direct cost of highly-pathogenic avian influenza (R49-million), looting and damage to infrastructure (R18-million), ongoing Covid-19 costs (R14-million), as well as water and electricity supply interruptions (R27-million).
CEO Chris Schutte says the group's tried and tested strategy has supported a solid set of results under prevailing market conditions and a challenging operational environment, which has seen “enormous” pressure come to bear on the local poultry industry over the past year.
A number of headwinds faced Astral during the reporting period, and leading these were the high cost of maize and soya meal, driven to near record highs on South Africa Futures Exchange by factors in the international coarse grain markets, notwithstanding the good local maize crop of 16.2-million tonnes harvested.
Feed prices increased sharply for the year under review and, in a market reflecting the fallout of a weak local economy and the impact of the Covid-19 lockdowns, passing on all of the higher input costs was not achieved, Astral reports.
The results were also impacted by a number of extraordinary costs, among these being costs associated with bird flu experienced in Astral’s broiler breeding operations, national load-shedding and continued municipal service delivery challenges in Standerton, Mpumalanga, as well as the July looting and unrest in KwaZulu-Natal and parts of Gauteng with major disruptions to the supply chain.
Broiler slaughter volumes increased by 4.8% for the year under review, benefiting from the Festive poultry processing plant’s expansion volumes, while sales volumes increased by 6.4%, to 28 832 t, and include sales out of stock accumulated during 2020 on the back of the Covid-19 lockdowns in that period.
However, with the completion of the expansion of the Festive plant in 2020, Astral rolled out higher broiler volumes to the market, increasing the average slaughter numbers from 5.2-million birds a week in 2020, to 5.4-million birds a week in 2021.
However, Astral also notes that trading conditions improved as South Africa’s economy continued to recover with the easing of Covid-19 lockdown restrictions. This was further assisted with deep cut promotional activity by retailers, resulting in higher sales volumes for Astral.
The company points out that the quick service restaurant and fresh sales categories have recovered to pre Covid-19 levels, thereby positively impacting on product mix and leading to a better balanced sales basket.
Also, broiler sales realisations increased by 8.1%, reflecting an effort to recover the significant increase in feed prices on the back of higher maize and soya meal costs for the period under review.
However, Astral notes that broiler sales realisations only recovered to pre-Covid-19 levels during the last quarter of the reporting period.
CFO Daan Ferreira says cash flow during the year was impacted by the final dividend paid of R299-million in respect of the previous financial year, which was relatively high as a result of no interim dividend being paid during that year.
He adds that net cash outflow for the year was R265-million; however, the group remained in a net cash surplus position throughout the year.
“Net surplus cash at the end of the year was R278-million, and the group is well positioned to fund the payment of the final dividend of 400c a share declared. The total dividend for the year is 700c a share.”
Meanwhile, Astral has appointed Dries Ferreira as group financial manager and CFO designate, with effect from January 10, 2022.
Daan Ferreira will retire as CFO during Astral’s 2023 annual general meeting.