Astral Foods is bumping up its earnings forecast

ASTRAL Foods, the largest integrated poultry producer in South Africa, has upgraded its earnings forecast for the six months to March 31 – it now expects to raise headline earnings a share by 130 to140 percent.

On February 2 it had indicated that earnings for the six-month period was expected to be at least 100 percent more than the same period in 2021.

Small Talk Daily analyst Anthony Clarke said on Twitter that a revised earnings update from Astral had been predictable, and he had expected the higher earnings forecast.

“They had a great H1 (as expected) as they are well hedged,” he said. He also believed the second half earnings might, however, be challenging for Astral, as input costs had soared.

@tawakarombo from Tawakarombo & Associates also said on Twitter that Astral’s poultry operations could not recover the then significant increases in feed costs through the selling price of poultry products. “Increased sales volumes saved the day, based on better economies of scale,” he said.

Astral said in a trading update yesterday that earnings per share were now expected to increase between 140 percent (829 cents a share) and 150 percent (888c a share) compared to the previous comparable period.

Headline earnings per share were expected to increase between 130 percent (776c per share) and 140 percent (836c per share) compared to the previous comparable period.

The earnings growth was measured against a low base impacted by Covid-19 related lockdowns, which had adversely affected the South African economy.

At the time, Astral Foods’ poultry operations could not recover the then significant increases in feed costs through the selling price of poultry products, the group said.

In the six months to end March, however, the improved earnings were achieved mainly through increased poultry sales volumes, as a result of significant capital investments made to increase Astral Foods’ poultry production and processing capacity, resulting in improved economies of scale benefits throughout the group’s integrated value chain.

There had also been improved poultry margins, supported by efficiency improvements through the broiler value chain as well as the partial recoupment of higher feed raw materials and energy input costs, the group said.

The results are expected to be released on or around May 15.

Astral’s share price inched up 0.8 percent to R146.51 yesterday morning, only marginally higher than the R142.94 that it traded at 12 months before on the same day.