Shares in Astral Foods rose more than 4% in morning trade after it reported full year revenue growth of over a fifth, and it more than doubled its profits. The strong performance came as the group’s main poultry division was able to increase its profitability more than fivefold, benefiting in part from promotional activity among retailers, which helped grow its volumes.

The JSE-listed chicken producer, which also nearly doubled its total dividend to shareholders to R13.80 from R7 previously for the year to September, attributed the performance in the main to growth in broiler sales volumes, as well as a recovery in the selling price of poultry.

The company’s full year profit was R1.07 billion, some 126% higher than the R473.7 million reported in the 2021 financial year. By 10:20am, the company’s shares were 4.33% higher at R178.22. Click here for details on Astral's shares and other info.

But even with the strong performance Astral sounded a cautious note about future prospects, saying issues such high unemployment and rampant living costs were bringing pressure to bear on consumers, while "record high raw material costs" were expected to be repeated in the 2023 financial year.

At the same time the group said "collapsing municipal infrastructure" and load shedding continued to negatively affect its operational efficiencies, which added a "significant cost burden" with "significant capital expenditure in diesel generator capacity".

Other concerns for the company included the threat of bird flu, with Astral saying there were "rapidly rising infection numbers in Europe and America".

But Astral also flagged that it had a “strong and resilient balance sheet”, which would support Astral in "navigating the headwinds facing the poultry industry".

It said even with trading conditions remaining under pressure due to record high unemployment levels and weak economic growth, promotional sales activity the retailer sector resulted in higher sales volumes.

The group reported revenue increased 21.9% to R19.3 billion, with the poultry division contribution 81% to total external revenue. It said its operating profit margin increased to 7.4% from 4.6% in the prior year.

Casparus Treurnicht, portfolio manager and research analyst at Gryphon Asset Management said Astral had delivered a "good result given all the headwinds it is facing".

"Feed prices skyrocketed earlier this year and we are in serious trouble regarding electricity supply and our water infrastructure is also problematic.  Despite these issues Astral still continued to make over a R1-billion in profit, more than double last year although there was still a reopening story (recovery from Covid-19 pandemic) especially from restaurant sector."

Treurnicht said Astral was also able to manage the threat of Avian influenza and that the performance of its poultry operations were "good to continue supplying strong local demand".

"Demand for Astral’s products are quite stable so it is all up to external factors and how they will behave going forward."

He said Astral was not in a position to control these outside factors, but could "simply make sure their operations run as smoothly as possible".

"Most of the feed prices are still high and the other issues still remain. The question is whether Avian influenza will stay away?"