Astral says it is sitting on a large cash pile but cannot spend aggressively as the poultry sector remains too volatile. Major risks still threaten the recovery it delivered in 2025.
The poultry producer released its annual results on Monday and told the media that, despite generating strong cash and cutting liabilities 9%, the group must keep a sizeable buffer on its balance sheet because the operating environment remains unpredictable.
The company ended the year in a stronger position with R1bn in cash reserve, improved profits, lower debt and a sharp increase in cash generation, but resilience is still fragile.
CEO Gary Arnold said the industry is exposed to several factors outside its control, including infrastructure failures, drought risk, high disease risk and imported chicken volumes that can destabilise local pricing. These pressures mean it cannot deploy its cash freely, even as questions are asked about future expansion or acquisitions.
Arnold said the strategy is not to run a conservative balance sheet, but one strong enough to absorb sudden shocks, citing 2023’s R500m loss as a reminder of how quickly conditions can deteriorate.
Astral does have a pipeline of strategic projects and efficiency upgrades and the board has already approved a revolving credit facility to support future investment, according to Arnold. But it warned that spending decisions had to be balanced with the need to maintain stability in a sector it described as volatile and cyclical.
According to Arnold, acquisitions remain a possibility, but only if the right opportunities arise and the balance sheet remains strong enough to support additional funding. For now, Astral intends to reinvest selectively in its operations, protect margins through efficiency projects and maintain its dividend policy of a two-times earnings cover.
Astral told the media that market conditions remain uncertain heading into the new year. While demand is balanced and stock levels are under control, Anorld warned that January and February are traditionally weak months, with constrained consumers likely to buy down. The group also expects higher imports from Brazil in the coming months, though it does not believe these will be large enough to destabilise supply.
The company said feed costs should be more supportive in 2026 with global and local grain supplies improving, which could help protect margins. But it said this does not remove risk and that bird flu remains a major threat.
Arnold said the group had a strong second half of the year. “This year was certainly a tale of two halves, where Astral faced tremendous pressure on earnings in the first half of the year but achieved a good recovery in the second half to finish in a strong financial position.”
The company resumed dividend payments in the period, paying shareholders R285m.
The group flagged bird flu as a major risk to the local poultry industry, with “slow progress on vaccination and [which] alarmingly appears to no longer be a seasonal disease”.
“Our stakeholders are aware of the turnaround journey that Astral embarked on following the very disruptive events of 2023, where national load-shedding and bird flu came at a massive cost to the business. The subsequent turnaround focused on improving Astral’s financial performance and restoring our balance sheet to a healthy position,” Arnold said.
“I am pleased to report that we have been successful in executing our turnaround plans, which is evident in the good set of results and quality of earnings reported. The restored cash balance places the business in a solid position to execute important business opportunities going forward.”
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