Astral has weathered the storm

Good trading results despite import threats

JSE-LISTED poultry producer Astral Foods has weathered stormy trading in the last 12 months, with the poultry division shrugging off the threats of chicken imports in the year to end September.

The company reported a massive 96.8 percent increase in headline earnings per share to 1 899 cents during period, up from 965c recorded during the similar period last year despite facing another threat in the form of the outbreak of the avian influenza.

The division also reported 7.9 percent increase in revenue to R9.9 billion while the group’s overall revenue was only up by 3.3 percent to R12.4bn.

Chief executive Chris Schutte said the company managed to shake off the EU imports, but it was still facing threats from Brazil and the US.

Reduced

“Although imports from the EU reduced considerably due to the outbreak of the avian influenza, the group has seen imports swing towards product from Brazil and the US. On average, the monthly total poultry imports for the year under review equalled approximately 44 percent of local production or 46 000 tons per month, which is on par with the prior year,” Schutte said.

The avian influenza outbreak in South Africa has caused significant damage to the local poultry industry.

The impact on Astral resulted in a write-off of R54 million in broiler breeding birds, which were culled to limit the spread of the disease.

In January, the local industry was united by protesting against EU imports after local producers and workers marched against the EU.

The march came after the industry shed more than 1 000 jobs because of chicken dumping with Rainbow Chicken Limited halving its operations at Hammarsdale in KwaZuluNatal.

Schutte said Astral Foods, however, managed to keep its workforce by reducing the hours worked.

“Through Astral’s contingency plans, the group was able to avert a short supply of broiler hatching eggs and day-old chicks to maintain broiler slaughter volumes at approximately 5 million birds per week,” he said.

Profit

The group’s operating profit increased 96.5 percent to R1.08bn, up from R549m, and the group declared a 115 percent increase in total dividend to 1 055c, up from last year’s 490c.

Revenue for the deed division declined by 8.4 percent to R6.6bn while operating profit declined by 19.3 percent to R391m.

Jordan Weir, an equities trader at BayHill Capital, said Astral’s poultry division was the main contributor to the impressive headline earnings per share figure.

“The second half of the financial year saw a favourable mix of increased top-line revenue income, coupled with lower feed raw material costs.

“These lower costs then helped amplify the margins earned on the increased selling prices. An improvement in feed conversion efficiency also played a major role in managing costs lower within the business,” Weir said.

He added that a once-off profit of R31m was made on the sale of one of their underlying investments.

Astral shares rose 0.5 percent on the JSE yesterday to close at R201.48.