Astral claims limited Covid-19 impact


Astral claims limited Covid-19 impact

Published Date: 2020-09-15 | Source: Stephen Gunnion | Author: Stephen Gunnion

Astral claims limited Covid-19 impact

Operating profit and headline earnings will be lower due to additional costs and the impact of the lockdown on chicken prices.

Astral Foods believes it may not have been as severely affected by Covid-19 and the national lockdown as some of its competitors. Even so, full-year earnings will still be up to a quarter weaker than last year.

In a trading update, the poultry group said its business performed satisfactorily in an environment that was impacted by Covid-19 and continuing water supply issues, with operating profit for the year to end-June expected to be down by not more than 15% and headline earnings per share declining by a maximum of 25%.

Astral said it incurred water supply costs at its poultry processing plant in Standerton over the year. Countrywide and localised load shedding in Standerton, as well as additional costs to manage the risks associated with Covid-19 and ensure the safety of employees also impacted its performance. These was partially offset by the continued good performance of its Ross poultry breed, with the company able to optimise the genetic potential of the bird. Its other brands include Country Fair, Festive and Supa Star Chicken.

The complete shutdown of quick service restaurants during the hard lockdown saw more chicken being channelled to frozen production, resulting in higher stock levels of individually quick frozen portions in the poultry industry. This resulted in downward pressure on selling prices to the retail market. The company said consumer spending patterns came under strain as economic conditions worsened. The profitability of its broiler operations in particular were negatively affected, while its feed division remained unaffected.

In May, the company held off on an interim dividend due to the uncertainty caused by the lockdown and the weak economic environment.

Astral's shares fell 2.4% to R138 yesterday.

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