SA’s biggest poultry producer, Astral Foods, said it had to subsidise the cost of producing chickens in the first half of the 2024 financial year as it could not pass it on to consumers due to market dynamics.
The company on Monday said margin pressure in the poultry division negatively affected the group in the period under review, resulting in an almost 50% slump in profit.
Gary Arnold, CEO of Astral, said the group experienced significant poultry selling price deflation, which, with higher input costs, led to negative poultry margins.
“During this period, Astral subsidised the cost of producing chicken, as higher feed and other inflationary costs could not be passed on in selling prices due to a very competitive poultry market landscape,” Arnold said.
The group’s headline earnings per share in the six months ended March fell 54% to R4.09 and an interim dividend of R2.20 was declared.
A cybersecurity incident in March resulted in a loss of revenue in the poultry division. With the costs to catch up a backlog in production, the event affected the group’s profits in the reporting period by about R20m.
Factors that might affect the poultry sector in the near future included bird flu, which remained a big risk to the local poultry industry, with little progress towards approval for the vaccination of poultry breeding stock.
Other risks included deteriorating growth prospects in the economy, increased unemployment that constrain local consumer spending, the threat to SA’s position in the African Growth & Opportunity Act, and global trade wars.
Updated: May 19
The story has been updated with Astral comment.
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