Astral chickens out of dividend


Astral chickens out of dividend

Published Date: 2020-05-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Astral chickens out of dividend

The poultry producer has also delayed a major capital programme to expand volumes as a result of the Covid-19 lockdown.

Astral Foods has held off on an interim dividend despite the limited impact of Covid-19 on its first-half results. The poultry producer says it is playing it safe due to the current economic environment and the extreme uncertainty caused by the "seemingly indefinite" lockdown. It has also delayed a major capital programme to expand poultry volumes after it couldn't complete final commissioning due to the lockdown.

Astral said it started to incur some additional costs related to Covid-19 towards the end of March as it complied with health and safety regulations while preparing for the lockdown. It hasn't experienced any major disruptions to its production capability during the lockdown with stringent social distancing, screening and employee welfare measures in place.

Over the six months to end-March, input costs rose due to higher maize prices. It managed to recover some of the increased input costs through a rise in poultry prices. It continued to incur some additional costs associated with load shedding, the legislated national minimum wage and ongoing water supply costs at its Standerton production facility.

Revenue rose 4% to R7.07 billion and operating profit increased by 8.5% to R546 million, supported by improved profitability at its Poultry division. Earnings and headline earnings per share were steady at R9.51. Last year it paid an interim dividend of R4.75. It ended March with surplus cash on hand of R470 million.

Astral said the shutdown of quick service restaurants had exposed it to late payments from customers in that market. Due to a lack of supply into the sector, a change in its product mix had resulted in a shift to lower-margin product lines.

Total poultry imports remained high, averaging around 30% of local consumption. However, higher import tariffs on frozen bone-in portions announced in March were expected to level the playing fields and discourage unfair trade.

Astral's shares fell 5.2% to R171.52 yesterday.

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