JOHANNESBURG – Listed poultry producer Astral nearly doubled the dividend payout for 2018 yesterday after profits soared on lower chicken feed costs.

Astral declared a final dividend of R10.50 a share, bringing the total to be paid to R20.50, a 94 percent improvement compared to R10.55 a share declared in 2017.

The company managed to declare the dividend despite spending R356 million on capital expenditure in 2018, which was high compared to previous years. 

Astral said it would spend R1 billion in the next three years to improve capacity at poultry processing plants, breeder and broiler farms and a feed mill.

Chief executive Chris Schutte said broiler feed prices declined in 2018 from 2017, due to lower raw material costs. 

“Feed costs reduced notably in the second half of 2017, and this continued throughout the period under review, contributing significantly to Astral’s earnings for the full year,” Schutte said. “Feed cost remains the key driver of profitability representing approximately 67 percent of the live cost of a broiler.”

Group operating profit also soared 78.7 percent to R1.bn from R1.08bn last year, resulting in an operating profit margin of 15 percent from 8.7 percent in 2017.

The poultry division recorded a 127 percent hike in operating profit to R1.434bn in the year to September, with the feed division posting an increase of 16.7 percent in operating profit to R457m.

External revenue for the group increased by 4.5 percent to R13bn from R12.4bn in 2017.

Schutte said the revenue was supported by higher poultry selling prices as well as higher volumes across all divisions.

“This, together with materially lower feed raw material costs, were the main drivers of profitability for the year.”

Schutte said that despite the devastating bird flu outbreak that hit the industry last year, Astral still managed to continue producing just more than 5 million broilers a week, owing to various contingency plans.

“The local poultry industry has not seen any incidents of bird flu since May 2018 and Astral experienced no losses due to the disease during the period under review,” he said.

He said Astral was not directly affected by the listeriosis outbreak in South Africa, with the company strengthening its food safety management systems, ensuring that its hygiene and quality management protocols manage the risk of food-borne pathogens within Astral’s processing plants.

Poultry imports into the country continued unabated, with imports from the EU reducing considerably due to the outbreak of highly pathogenic bird flu in those exporting countries; with a swing in imports towards Brazil and the US. 

BUSINESS REPORT