Poultry producer Astral Foods has indicated that its earnings a share and headline earnings a share for the year ending September 30, are expected to be down by no more than 25% on the comparative period’s reported results.
Astral CEO Chris Schutte on September 14 said Astral was “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 Schutte said “appears to have had a more severe impact on the financial results of other businesses within this sector”.
The financial year also includes water supply costs incurred at the group’s poultry processing plant in Standerton, in addition to countrywide and localised load-shedding and power cuts, and additional costs to manage the risks associated with Covid-19 and ensuring the safety of staff, which have all negatively affected the financial results for the year.
A complete shutdown in the quick service restaurant (QSR) sector during the hard lockdown saw more chicken being channelled to frozen production, resulting in higher stock levels of individually quick frozen (IQF) portions in the poultry industry.
Schutte said this resulted in downward pressure on selling prices to the retail market and that consumer spending patterns have come under strain as economic conditions in the country have worsened.
The profitability of Astral’s broiler operations, in particular, were negatively affected, while the feed division remained unaffected.
“Under these conditions the business has performed satisfactorily, and the operating profit is expected to be down by no more than 15%.
"In striving for operational excellence and executing our simple best cost strategy, Astral has remained resilient to the market conditions during this period,” Schutte commented.