Astral Foods expects a 25% dip in its earnings
DURBAN - Astral Foods, South Africa’s leading integrated poultry producer, expects its annual earnings to decline by up to 25 percent dented by costs to manage Covid-19 risks and a shutdown in fast food outlets during the hard lock down.
In its trading update yesterday, Astral said headline earnings per share (Heps) and earnings per share (EPS) for the year to end September were expected to be down by not more than 25 percent, compared to last year.
Astral Foods reported Heps of 1 674 cents a share and EPS of 1 659c last year. However, in the current financial year the group expected its EPS to be at least 1 244c and Heps to be at least 1 255c.
The group would release a further trading update once there was a reasonable certainty about the range of the decreases in earnings.
Chief executive Chris Schutte said that Astral was cautiously satisfied with its performance, considering that the entire second half of the financial year was negatively impacted by the lockdown associated with the Covid-19 pandemic, which appeared to have had a more severe effect on the financial results of other businesses within this sector.
“Under these conditions the business has performed satisfactorily, and the operating profit is expected to be down by not more than 15 percent. In striving for operational excellence and executing our simple best cost strategy, Astral has remained resilient to the market conditions during this period,” Schutte said.
Astral operated as an essential service provider during the lockdown and their operations ran like clockwork with no serious production interruptions.
The 2020 financial year also included water supply costs incurred at its poultry processing plant in Standerton.
The country-wide and localised load shedding in Standerton, plus additional costs to manage the risks associated with Covid-19 and ensuring the safety of their staff, had hurt the financial results for the year.
But these declines were partially offset by the continued good performance of the Ross poultry breed, where Astral was once again able to optimise the genetic potential of the bird.
However, a complete shutdown in the quick service restaurant sector during the hard lockdown saw more chicken being channelled to frozen production, resulting in higher stock levels of individually quick frozen portions in the poultry industry.
“This resulted in downward pressure on selling prices to the retail market,” the group said.
Astral Foods expects to release its results on or about November 16.
Astral’s share price closed 2.42 percent lower at R138 on the JSE yesterday.