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Supply Chain

South Africa's Astral Foods' Profits Hit By High Feed Costs, Drought

South Africa's Astral Foods Limited said on Monday its full-year profits plunged by 55% after higher feed costs hit its poultry division, a decline it first warned about in October.

The company, a poultry producer which also makes animal feed, said headline earnings per share (HEPS) for the full year ended 30 September stood at 16.59 rand, a 55% fall from the 36.91 rand reported a year earlier.

Astral Foods had already flagged that it expected a drop of between 50% and 60% in HEPS, the main profit measure in South Africa, in a profit warning.

In its outlook, the firm listed a number of factors which are likely to impact its business negatively, including a weak economy, high raw material prices and strong levels of poultry imports from Brazil and the United States.

'A Mixed Bag'

"Astral's view on the near-term prospects can be regarded as a mixed bag," it said, adding other changes, such as the expansion of its poultry production capacity, would have a positive effect.

While sales were up in its poultry division, expenses - mainly in the form of a 7.7% increase in the price of feed which represents the main cost per chicken - helped drag operating profits down by 74.5% to 371 million rand.

Astral's feed division however benefited from a rise in raw material prices, boosting revenues by 6.1% despite falling volumes and contributing to a 7.2% rise in operating profit.

Profits in its division covering the rest of the continent fell by over 30%, as feed costs rocketed in Zambia due to a drought and crop failure. Astral also took a provision for taxes owed by the Mozambican government which it does not expect to recover. It gave no further details.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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