•–”ƒŽǯ• •Šƒ”‡• •Ž—’
APE TOWN - Shares of poultry group Astral Foods slumped more than 10 per cent on Thursday, after it warned the next few months will be tough as it grapples with load shedding and surging feed costs.
The poultry group said it expects headline earnings per share to rise as much as 128 per cent in its year to end-September, from R12.28 previously, but said this was off a low base, given the prior year had been characterised by COVID-19 lockdowns.
Despite a ‘good performance’ for its 2022 year, the firm warned that the six months to end March 2023 would be tough, given ‘extraordinarily high feed costs,’ which it was unable to fully recover through price increases.
Feed costs make up 70 per cent of the cost of producing a broiler.
“SAFEX maize is trading at record highs following international coarse grain prices, exacerbated by a weak and volatile local currency against the US dollar,” the firm said. “The current outlook is for continued high soft commodity prices deep into Astral Foods’ 2023 financial year.”
Astral also said it is experiencing severe operational
disruptions on the back of Eskom load shedding. Production cutbacks have already been implemented from October 2022 to partially manage the impact of load shedding which severely impacts Astral’s ‘just in time’ integrated poultry production and processing chain.
“In addition, the delay in the implementation of anti- dumping duties and the continued dumping of poultry products on our shores, water supply disruptions and the further escalation of energy input costs will all have a negative bearing on the outlook for the 2023 financial year.”
Expectation
Small Talk Daily’s Anthony Clark said he was unsurprised at Astral’s slump as “something had to give” as the firm battled soaring input costs and an inability to fully pass these on to consumers.
“The expectation is that the festive period will be ok, because they will be running on some stocks of slightly lower priced maize,” said Clark. But you simply can’t pass on a year-on-year cost of between 36 per cent and 41 per cent (in maize) to the consumer, let alone the high cost of processing and electricity disruption, et cetera,” he said.
In afternoon trade on Thursday Astral’s shares had slumped 12.79 per cent to R169.72, almost completely erasing its year-to-date gain.