Chicken producer Astral Foods’ profit for the year ended 30 September 2020 has fallen by 13% as the poultry industry continues to battle with the impact of Covid-19 and higher feed costs.
The group released its annual results on Monday, reporting an increase in revenue of 5% to R14.1 billion from R13.5 billion in 2019, but a 13% fall in profit to R561 million from R638 million in 2019. Headline earnings per share decreased to R14.41 from R16.74, last year.
Astral said the second half of its year was negatively affected by South Africa’s lockdown, which led to the closure of hospitality and quick service restaurant sectors.
“Poultry producers that supply these markets were found overnight with surplus chicken and, as a result, had to channel this excess into various frozen categories. The resulting oversupply led to a stock build in the industry and later culminated in aggressive price cutting in the market to clear these stock levels."
The impact of Covid-19 added to the higher feed costs for poultry producers, due to a combination of the weakening of the rand, weather concerns in the international grain markets, higher global coarse grain prices and an increase in demand from China.
The group also saw had operational challenges due to load shedding and municipal infrastructure issues, including water shortages at its Meadow Feeds facility in Standerton, Mpumalanga.
The company, whose brands include Goldi Chicken, County Fair and Festive, saw its share rise by more than 4% after it released its results on Monday. It is also issuing a final dividend of R7.75 up from R4.25 last year.
“We continued to execute our simple yet resilient strategy, which once again assisted the group in navigating through new challenges brought on by the Covid-19 pandemic. Astral can proudly report satisfactory results, with all its integrated operations continuing to run like clockwork during South Africa’s hard lockdown,” said Chris Schutte, CEO of Astral.