Astral reigns again after historic loss

Henry

The chicken giant Astral Foods has turned its ship around again.

Chris Schutte, CEO of Astral, says that this company was already profitable again during the first quarter of the new financial year after recording a loss for the first time in its 23-year existence at the end of the previous financial year.

After the historic loss, the company indicated that in the future it will concentrate on the normalization of its operations and will make every effort to rebuild the balance sheet.

This is exactly what the company did in the first quarter of the 2023‑24 financial year.

In the first quarter of the new financial year, Astral “made good progress” in dealing with various challenges – including load shedding and bird flu – which contributed to the loss at the end of the previous financial year.

Among other things, Astral was able to maintain emergency backup power generation capacity at all of its plants.

Lower phases of load shedding have also enabled the group to keep its diesel expenses below expected costs.

Schutte says the company still had to incur significant diesel costs in the first quarter to keep the Standerton poultry processing plant running amid municipal power outages.

Contingency plans have also been put in place to ensure uninterrupted water supply.

Schutte says lower feed costs were achieved in the first quarter thanks to normalized broiler age and live weight, which led to an improved feed conversion rate.

The slight easing of local soft commodity input prices also counted in Astral’s favour.

Astral was also able to circumvent a potential shortage of chicken due to the bird flu outbreak by means of an expensive program to import broiler eggs.

RNews previously reported that Astral Foods recorded an income of R19.3 billion at the end of September, its financial year-end, but a loss of R621 million.

Although its income in the feed division increased on a year-on-year basis, the income from the poultry division decreased in the previous financial year. This was driven by a 9.6% decrease in sales volumes.

This division is responsible for 82% of Astral’s overall external revenue.

However, according to Schutte, this division achieved a marginal level of profitability in the first quarter.

Astral expects, following the low level of earnings it achieved in the previous comparative six months (ended 31 March 2023), that earnings per share and headline earnings per share for the six months ended 31 March 2024 can rise by at least 300% to 647c and 654c respectively.

“The group’s financial position remains healthy,” says Schutte.