Astral Foods said on Tuesday its operating profit for the first quarter of its 2019 financial year was significantly lower than the corresponding period.

JOHANNESBURG  - Integrated poultry producer Astral Foods said on Tuesday its operating profit for the first quarter of its 2019 financial year was significantly lower than the corresponding period in the previous year and would have a negative impact on results for the six months ending March 30.

"The previous year’s results for the same period were at a record historical high, benefitting at the time from low feed costs following a record maize crop for the 2016/2017 marketing year," it said.

Selling prices for poultry products were stronger due to the negative impact of Avian Influenza resulting in the short supply of broilers to the market, Astral Foods added.

In its September 2018 year-end results presentation, the company said raw material prices were in an upward trend and consumer disposable income was under pressure.

"This has now manifested itself, with the lack of widespread rains particularly in the central and western parts of the maize producing areas following an El Nino weather pattern, resulting in upward pressure on maize prices which will lead to a material increase in feed costs for the 2019 financial year," it said on Tuesday.

"Higher feed input costs and depressed poultry selling prices have resulted in significant pressure on profit margins."

Disappointing consumer spending during the first quarter of the company's 2019 financial year, together with high poultry stock levels at the end of the 2018 financial year, resulted in average selling prices below that of the comparative period.

"Despite the current trading conditions, Astral Foods is continuing with its strategy to upgrade and expand the Festive processing plant located in Midrand,"  it said.

"The upgraded facilities will provide additional capacity for value-added and fresh products, where supply has been hampered in the past due to Astral Foods’ capacity constraints."

It said the initial phase of the project was expected to be completed during 2020.

- African News Agency (ANA)