As­tral Foods in­curs more than R120m costs in op­er­a­tional chal­lenges

Pretoria News - - BUSINESS REPORT - SANDILE MCHUNU [email protected]

SOUTH Africa’s lead­ing in­te­grated poul­try pro­ducer As­tral Foods has re­ported in­cur­ring more than R120 mil­lion in costs re­lat­ing to op­er­a­tional chal­lenges caused by wa­ter sup­ply con­straints from the de­te­ri­o­ra­tion of in­fra­struc­ture in Lekwa Mu­nic­i­pal­ity, which sup­plies its pro­cess­ing plant in Stander­ton.

In its fi­nan­cial re­sults and div­i­dend dec­la­ra­tion for the year ended Septem­ber 30, As­tral said se­vere wa­ter sup­ply in­ter­rup­tions at Goldi, its largest poul­try pro­cess­ing fa­cil­ity based in Stander­ton un­der the Lekwa Mu­nic­i­pal District, as well as Eskom elec­tric­ity in­ter­rup­tions, had marred what could have been a good year for the group.

“We have to utilise about 110 trucks a day to en­sure that the op­er­a­tions have the wa­ter needed in that op­er­a­tion. On top of the R120m we have spent for wa­ter and elec­tric­ity, we are also spend­ing an ad­di­tional R2m a month on diesel.

“It be­comes dif­fi­cult to con­tinue in­vest­ing when we have these in­fras­truc­tural chal­lenges,” chief ex­ec­u­tive Chris Schutte said, blam­ing the govern­ment for its fail­ure to sort out the wa­ter sup­ply de­spite as­sur­ances given to the group in the past.

The over­all ex­tra­or­di­nary costs for As­tral dur­ing the pe­riod amounted to R223m, which also in­cluded the cost of in­dus­trial ac­tion in its KwaZulu-Na­tal op­er­a­tions.

The group re­ported

a4 per­cent in­crease in rev­enue to R13.5 bil­lion while op­er­at­ing profit de­creased by 55 per­cent to R882m.

“As­tral’s earn­ings for the year were sharply down com­pared to a record profit in fi­nan­cial year 2018.

“Sub­stan­tially higher raw ma­te­rial costs lead­ing to high feed prices, a 66 per­cent con­tri­bu­tion to the to­tal live cost of pro­duc­ing a broiler, to­gether with lower poul­try sell­ing prices yearon-year, neg­a­tively im­pacted poul­try mar­gins,” Schutte said.

Schutte added that ex­clud­ing these un­for­tu­nate costs, As­tral would have re­ported one of its better fi­nan­cial years since list­ing.

The group de­clared a fi­nal div­i­dend of R4.25 per share, which is a 60 per­cent de­cline from the R10.50 a share de­clared at the same time last year.

Its head­line earn­ings per share de­clined by 55 per­cent to 1 674 cents a share, and the group de­clared a to­tal div­i­dend of 900c, down by 56 per­cent com­pared to last year.

The poul­try di­vi­sion in­creased its rev­enue by 2.6 per­cent to R10.9bn, the bulk of which was de­rived from im­proved sales of broiler day-old chicks and par­ent stock in the ex­ter­nal mar­ket, aug­mented with higher broiler sales vol­umes.

The group said broiler slaugh­ter vol­umes re­mained rel­a­tively flat, de­spite pro­duc­tion cut­backs as a re­sult of the Stander­ton wa­ter cri­sis.

Sales vol­umes in­creased by 2.6 per­cent to 11 438 tons, largely due to sales out of stock in the sec­ond half of the re­port­ing pe­riod.

Broiler feed prices in­creased by 7.7 per­cent due to higher raw ma­te­rial costs for the re­port­ing pe­riod.

Op­er­at­ing profit for the poul­try di­vi­sion de­creased by 74.5 per­cent to R371m.

In the feed di­vi­sion, rev­enue in­creased by 6.1 per­cent to R6.6bn as a di­rect re­sult of higher sell­ing prices on the back of an in­crease in raw ma­te­rial costs.

Op­er­at­ing profit in­creased by 7.2 per­cent to R489m with the op­er­at­ing profit mar­gin re­main­ing flat at 7.4 per­cent.

AS­TRAL has ex­pe­ri­enced se­vere wa­ter sup­ply in­ter­rup­tions at Goldi. | Sup­plied

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