Astral aims to increase production 20% over next three years

Astral Foods (Astral) welcomed record earnings this year, but feed price increases would have to be carefully managed and production optimised to maintain momentum, a statement by the company said.

Headline earnings per share were up 94% for the year ended 30 September 2018, increasing to R37,12.

Revenue was up 5% to

R13 billion, while operating profit increased 79% to R1,9 billion.

CEO of Astral, Chris Schutte, told Farmer’s Weekly that he was satisfied with the results, which were largely made possible by improved feed prices. Schutte said feed comprised about 63% of the cost of rearing a chicken.

“We had a lot of support on the raw materials side, which remains our biggest input cost,” he said.

Market demand for poultry had also remained high, which supported stronger prices. This, coupled with feed cost savings, meant the company was able to increase profit despite not really increasing volumes, Schutte said.

He was upbeat about the state of production, saying that by May this year, Astral’s breeder stock population had fully recovered from the avian influenza outbreak that occurred last year, and was now producing about five million broilers every week.

“We lost about 19% of our breeder stock … we are now slightly better off than before the avian influenza outbreak,” he said.

Speaking about feed, Schutte said that the company was planning to “tighten its belt” in 2019 and had already started feeling the impact of higher maize prices. He explained that for every R100/t increase in the maize price, overall production costs increased R50 million.

While imports remained a challenge, Schutte welcomed the formalisation of a safeguard for imports from the EU under the economic partnership agreement. However, the focus would now shift to mitigating losses due to poultry imports from countries such as Brazil.

According to Schutte, Astral would investigate whether this was possible through BRICS structures, as South Africa accounted for only 2% of poultry produced in the BRICS group, which included Brazil, India, Russia, China and South Africa.

demand remained high, thus supporting prices

“We are really tiny, so if someone comes and dumps here it has a huge impact on us,” he said.

Looking ahead, he said Astral had also committed to investing R1,1 billion over the next three years into growing its poultry production capacity by 20%. This was in line with the company’s expansion strategy as a “pure poultry company”.

“We just have to ensure that we constantly produce chicken cheaper than our competitors,” he said. – Sabrina Dean

Chris Schutte