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.