Astral Foods posted a sharp financial turnaround in the year to September 30, 2024 after loadshedding and avian flu caused big losses in the 2023 financial year. Picture: Simphiwe Mbokazi / Independent Newspapers
Astral Foods’s share price rose 1.9% to R169.33 yesterday after reported that it had rebounded from massive load shedding and avian flu-related losses in 2023 and increased headline earnings per share by 245% in the 12 months to September 30.
Revenue increased 6.4% to R19.4 billion, with the increase primarily attributable to the recovery by the Poultry Division from a loss-making position to a profit.
Profit before interest and tax increased by 281%.
An operating profit of R1.13bn compared to an operating loss of R621 million in the previous year, an increase of 281.2%, was mainly due to the absence of load shedding and bird flu costs in the year. The operating margin increased from a loss of 3.2% (2023) to a profit of 5.5%.
Net working capital increased by R222m as a result of the repopulation programme of broiler breeders, following the 2023 bird flu pandemic.
In addition, the recovery of revenue volumes boosted accounts receivable by R304m, as trading normalised post the load shedding disruptions. Lower inventory generated a cash inflow of R374m, supporting a balance sheet rebuild.
Operating profit for the Poultry Division increased by 142% to R580m compared with a R1.38bn loss the year before. The operating profit margin increased to 3.4% from -8.7% in 2023. A final dividend of 520 cents a share was declared.
Prospects for the new financial year include continued risk from bird flu, with slow progress towards approval for the vaccination of broiler breeding stock. Water supply disruptions, which have become commonplace, were a risk.
Constrained consumer spending is likely to remain a key influence on market conditions, determining supply and demand dynamics going forward.
The competitive retail landscape, with extensive chicken promotional activity, will continue to place pressure on selling prices.
However, finished goods stock levels had reduced markedly to manageable levels. The formation of a Government of National Unity may stabilise the economy and support much-needed investment and growth.
Expected interest rate cuts could result in improved economic prospects in 2025, and the two-pot retirement reforms could provide a boost to consumer spending.
Weather forecasts also reflected a developing La Niña system with favourable prospects for the local maize crop currently being planted.
“Spare processing capacity bodes well for the dilution of fixed costs and revenue growth opportunities,” the group directors said.
IN the past year, non-feed costs in the poultry division reduced, positively impacted by a R151m reduction in the cost of loadshedding. Costs relating to water supply interruptions were also lower than in 2023.
There was an insurance recovery relating to the 2023 avian flu claim of R198m in the broiler breeding operations.
In the past financial year broiler performances improved significantly following the normalisation of bird age and live weight in June 2023, as the backlog in the slaughter programme following the load shedding crisis was cleared, with efficiencies for the 12-month period surpassing historical performances.
Together with lower feed prices on better raw material input costs, broiler live costs improved for the year. Broiler feed prices decreased by 2.1% over the year, with feed costs remaining the key driver of profitability, representing approximately 65% of the live cost of a broiler.
Astral Foods announced last week that its chief operating officer Gary Arnold would be appointed CEO from February 1, 2025 following the retirement of Chris Schutte from the position on January 30, 2025, at the annual general meeting. The board had announced Schutte’s retirement on August 8, 2024, and that a successor was being sought
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