Astral Foods, South Africa’s largest poultry producer, anticipates a return to profitability in the half-year ending March 31, overcoming challenges posed by the country’s severe bird flu outbreak and power disruptions. The company projects a significant improvement in headline earnings per share (HEPS), estimating a minimum 300% increase to 654 rand compared to the same period last year when it was 163 rand.
During the year concluding on September 30, Astral recorded its first-ever operating loss of 621 million rand ($33 million), attributed primarily to expenses related to the high-pathogenic avian influenza (HPAI) outbreak and increased diesel costs amid South Africa’s electricity crisis. The nation’s ongoing struggle to maintain sufficient electricity production from aging coal-fired plants contributed to the operating loss.
While diesel costs persist, Astral noted a reduction as power cuts eased in the first quarter of the current financial year. Decreases in feeding costs, driven by lower commodity prices, also positively impacted the company’s financial outlook.
Despite these improvements, challenges persist, including disruptions in water and electricity supply, as well as additional costs incurred in importing broiler hatching eggs to rebuild the chicken flock decimated by the bird flu outbreak. Astral expressed disappointment with the International Trade Administration Commission of South Africa’s decision to lift punitive tariffs on poultry imports, asserting that there is no chicken product shortage justifying such a move.
South Africa’s poultry producers argue that increased chicken imports will adversely affect a sector already grappling with the aftermath of the avian flu, an electricity crisis, and elevated input costs.
Quest : Emmanuel kelvin